Electric furnace shift in the background of Nippon Steel's 2 trillion yen acquisition of US Steel, are domestic electric furnaces the next target? 3 stocks that are attracting attention for industry restructuring

Small-scale electric furnaces that Nippon Steel wants
The materials published by Nippon Steel on December 18 regarding the acquisition agreement with the USS set “decarbonization by 2050” as a common goal for both companies. Furthermore, the most advanced electric furnace mini mill is listed as the strength of USS. USS has the cutting-edge mini mill business company “Big River Steel,” which was acquired in 2019, under its umbrella, and a new facility to double production capacity is scheduled to be put into operation from the second half of 2024.

Is there no future for blast furnaces that emit 4 times more CO2 than electric furnaces?
Electric furnaces mainly melt steel scrap to make steel. Iron ore is chemically reacted with coke at high temperatures to make steelWhereas a blast furnace is said to generate about 2 tons of CO2 to produce 1 ton of iron, the emissions are said to be about one-quarter if it is an electric furnace. New technologies such as hydrogen reduction steelmaking to suppress CO2 emissions are also being studied, but mass production has not been achieved.
Electric furnaces are excellent not only in terms of decarbonization, but also in terms of resource recycling. When the world's population plateaues, it is also expected that large amounts of used iron, which has been mass-produced for over 100 years until now, will occur. Mr. Hiroshi Komiyama, chairman of the Mitsubishi Research Institute and former president of the University of Tokyo, has 24 units (at the time) in Japan in response to the Bloomberg interview dated 21/5/17Blast furnaces “will almost disappear around 2050”It shows the way of looking at it.
Currently, high-grade steel, such as automobile frames, is often manufactured in blast furnaces, but it is expected that the shift to electric furnaces will progress in the future.

Major domestic companies are finally shifting from focusing on blast furnaces to electric furnaces
Meanwhile, the Japanese steel industry, starting with Nippon Steel and JFEHD, which are two strong companies, is centered around blast furnaces. From around the latter half of '22, concrete movements to shift electric furnaces finally began to progress.
Nippon Steel established a large electric furnace for high-grade steel manufacturing in Himeji City, Hyogo Prefecture in 2022/10 and commenced commercial operation. In 23/5, it was announced that full-scale studies on the conversion from the blast furnace process to the electric furnace process had begun using steel mills in Kitakyushu City and Himeji City in Fukuoka Prefecture as candidate sites.
Also, JFE Steel, which is under the umbrella of JFE Holdings, announced in 23/5 that it will introduce electric furnaces in Chiba City, Chiba Prefecture in the second half of fiscal year 25. In November, it was revealed to Kurashiki in Okayama prefecture that they intend to convert the blast furnace to a large electric furnace in fiscal year 27.

Is the restructuring of the domestic electric furnace industry about to begin?
While major domestic electric furnace shifts are being delayed, what is attracting attention is the industry restructuring of existing electric furnace manufacturers.
According to the website of the Ordinary Steel Electric Furnace Industry Association, it is said that ordinary steel electric furnace companies have about 30 companies and about 50 offices in Japan, and restructuring has been delayed compared to blast furnace manufacturers. Whereas the sales scale of blast furnace manufacturers is about 8 trillion yen for Nippon Steel and 5.3 trillion yen for JFEHD, electric furnace manufacturers are in the 300 billion yen range even for listed companies, and there are many unlisted companies.
Concerns about electric furnaces include the use of a lot of electricity and the possibility that it will be a scramble for steel scrap, which is used as a material depending on the season.In addition to the construction of new electric furnaces, it is expected that capital capacity will be required for development research on electric furnaces utilizing renewable energy and development of steel scrap collection routes。