Nippon Steel and Sumitomo Metal Corporation (NSSMC) will sell around half its shares in Kobe Steel, and Kobe will also sell shares in NSSMC, according to press releases from the two Japanese steelmakers. The move sees them stepping back somewhat from their 12-year alliance. The shareholdings were the result of a strategic alliance declared in 2002 between Kobe Steel and the then separate Nippon Steel and Sumitomo Metal Industries, Kallanish understands.

The merger of Nippon Steel and Sumitomo Metal Industries left the respective share ownerships between NSSMC and Kobe double the original plan, while relations have reportedly not been twice as good. Kobe Steel will reduce its stake in NSSMC by half to 0.7%, while NSSMC will cuts its stake in the former from 5.89% to around 2.95%.

In 2001, the alliance was first mooted and in 2002 agreements were signed to swap shares and for Kobe Steel to supply semi-finished products to Nippon Steel’s Nakayama Steel Works. Both Nippon Steel and Kobe Steel were also to supply Sumitomo’s Wakayama Works with hot rolled coil.

When further consolidation finally came, however, Kobe Steel was not part of the deal. Kobe executives were only told of the merger between Nippon Steel and Sumitomo Metal Industries well into the merger process, according to local media reports.