Nippon Steel Corporation announced that it has reached an agreement with Vallourec SA, an important strategic partner in the pipe and tube business, regarding Nippon Steel’s participation in the share capital increase proposed by Vallourec in the form of a rights offering to subscribe to new Vallourec shares, with preferential subscription rights for existing shareholders Rights Issue
In Brazil, Nippon Steel and Vallourec have continued efforts to improve the financial performance of Vallourec Solugoes Tubulares do Brasil SA, a pipe manufacturing joint venture among Nippon Steel, Sumitomo Corporation and Vallourec However, the demand for carbon OCTG pipes produced by VSB for Nippon Steel has declined since last year. As it is not economically viable for Nippon Steel to maintain its allocated annual capacity of 300 thousand tonnes at VSB, Nippon Steel has exercised a put option pursuant to the joint venture agreement of VSB to sell all of the 15% shares in VSB owned by Nippon Steel group to Vallourec. The transfer of shares is scheduled to be completed by the end of March 2021. The allocated capacity of VSB for Nippon Steel will gradually decrease and terminate in 2022.
By implementing the above plans, Nippon Steel will concentrate its production of OCTG pipes to Kansai Works and improve the cost competitiveness, as well as enhancing the high-grade product capability, and further strengthening the profitability of the OCTG pipe business.
For more than 40 years, Nippon Steel and Vallourec have established and maintained strong partnership through cooperation in developing VAM premium joints for OCTG business, as well as operating joint ventures in Brazil, USA and Asia. Since 2016, Nippon Steel and Vallourec have accelerated the VAM premium joint development programs, and have expanded the scope of cooperation to include industrialization and enhanced customer service capabilities.