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Business

Nippon Steel doubling sheet output at UAE affiliate

DUBAI, United Arab Emirates -- Nippon Steel & Sumitomo Metal will soon double production of construction-use steel plate in the United Arab Emirates through a local affiliate, tightening focus on promising export markets amid stagnant steel demand in Japan.

Al Ghurair Iron & Steel, in which Nippon Steel holds a 20% stake, will start up a second galvanizing line at its Abu Dhabi plant by the end of October. This will lift annual capacity in high-grade, rust-resistant steel for roofs and walls to 400,000 tons. The project is thought to have cost around 10 billion yen ($97.1 million).

Despite Nippon Steel's limited stake, Al Ghurair imports most of its ungalvanized steel from Japan. The Japanese company therefore views the partnership as key to keeping capacity utilization up at steel plants at home, given sluggish growth in demand there. The Persian Gulf region's steel market, meanwhile, is booming thanks to a number of major construction projects. The UAE is also an important base for exports to northern Africa and western Asia.

Nippon Steel production technology in the new line will let the plant make thinner steel suited to a variety of architectural settings. While cheap materials from such countries as China and India are readily available in the Middle East, high quality will help Al Ghurair products stand out.

The Japanese steelmaker first invested in Al Ghurair in 2011 and is now dramatically enlarging its own overseas footprint, securing demand for exported steel. The company has put down 12 billion yen to add a third metal-coating line, set to begin operations in 2018, at a Thai joint venture with Australia's BlueScope Steel. Other Japanese steelmakers are pursuing similar partnerships abroad to keep the export business strong as low-cost competitors flood the global market.

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