Nippon Steel Corp, which formally combined with Sumitomo Metal Industries Ltd in 2011 following moves to cooperate in 2009, will push to accelerate cost cuts in a bid to become more competitive with steelmakers in China and South Korea.

Nippon Steel & Sumitomo Metal Corp, as the new company is known, will streamline production lines at domestic steelworks, moving forward a plan to save 150bn yen ($1.9bn) annually, said Shoji Muneoka, who was appointed chief executive officer of the Tokyo-based company . Closing blast furnaces will also be considered in the longer term, he said.

The combination of Japan's largest and third-largest steelmakers, announced in February 2011, was designed as a way to gain leverage over raw material suppliers while trying to fend off competition from South Korea's Posco and Shanghai-based Baoshan Iron & Steel Co. "Unless the new company cuts costs, they won't be able to survive the competition.” said Yuuki Sakurai, president of Fukoku Capital Management Inc., which manages 1.5 trillion yen of assets. "Asian steelmakers will be locked in a fierce battle if the global economy slumps in the next year or two.”

Nippon Steel was formed in 1970 through the merger of Yahata Iron & Steel Co and Fuji Iron & Steel Co. It was one of the world's top three steel companies from 1970 to 2008 before Chinese mills and Posco overtook the output volume of the company in 2009, pushing it to sixth place globally.

Posco became the first non-Japanese steelmaker to become Toyota Motor Corp closest suppliers this year, rivalling automotive steel sheet producers in Japan.

Nippon Steel & Sumitomo Metal will allocate 800 workers and about 70bn yen a year on research and development, more than any of its competitors, said CEO Muneoka.