Japan’s Nippon Steel, JFE Looking to Raise Investment Further in Electrical Steel

Japan’s Nippon Steel and JFE Holdings are looking to raise their 172 billion yen ($1.3 billion) spending to ramp up production of electrical steel, which is used in electric vehicle (EV) motors. “Considering the trajectory of the EV transition, it looks like supply will be insufficient,” Nippon Steel executive vice president Mori said. “Customers are asking us to increase the capacity, so additional steps are now under consideration.” The steelmaker is considering expansion beyond 2024, when it expects to complete a 50% increase in electrical steel production capacity. JFE will also look to step up efforts to boost the already planned doubling of capacity by September 2024.

Electrical steels have enhanced magnetic properties and help limit energy loss in EV motors, and are also used in power-generation equipment and mobile phones. The material is joining others, including nickel, copper and rare earths, that are expected to see a long term boost in demand.

There’s only a relatively small number of producers of electrical steels and there are significant barriers to entry, which causes supply to tighten.

JFE will consider options including building a plant in North America or other regions where demand will be strong. Nippon Steel said it is also looking to expand outside of Japan, but the next investment is more likely to be domestic, to better safeguard the technology.

Japanese carmakers have so far been slower to adopt plug-in EVs than rivals in China and the West, but they are on the case. Toyota, the biggest customer of both Nippon and JFE Steel, wants to sell 3.5 million units a year by the end of this decade.

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