The Nikkei business daily said that Nippon Steel Corporation, the world's No 5 steelmaker, will post an appraisal loss on securities it holds of around JPY 80 billion in April to December 2011 period due to a decline in share prices of its merger partner Sumitomo Metal Industries.

The daily said that reflecting the loss, Nippon Steel is likely to lower its earnings forecasts for the full year ending March 2012. It added that Nippon Steel needs to write down the loss because it held 451.76 million shares in Sumitomo Metal worth JPY 63 billion, although the book value was seen as more than double that at around JPY 140 billion.

The two firms plan to merge in October 2011 to create the world's second biggest steelmaker, aiming to cut costs of JPY 150 billion three years after the consolidation of facilities, but without shutting any of their domestic mills.

In September 2011, Sumitomo Metal Industries, Japan's third biggest steelmaker, posted a similar appraisal loss on securities it held of JPY 79.76 billion for the July to September 2011 quarter due in part to a decline in prices in Nippon Steel shares.

(Sourced from www.reuters.com)