TOKYO: Nippon Steel Corp is planning to raise output capacity in overseas markets such as India and the United States and reduce it in Japan to align with future demand levels, a company executive said.

"Our imminent task is to improve our overseas profits by capitalising on recovering global demand from automobiles," Executive Vice President Katsuhiro Miyamoto told Reuters in an interview on Wednesday.

"In the mid-term, we want to expand our production capacity overseas where demand is expected to increase," he said.

Last year, Japan's biggest steelmaker and ArcelorMittal, the world's largest steelmaker, jointly bought India's bankrupt Essar Steel, which has an annual capacity of 9.6 million tonnes.

The companies plan to boost the capacity of the new venture, ArcelorMittal Nippon Steel India, to 12 million-15 million tonnes as planned and further in the future, Miyamoto said. "We will also look to expand capacity at its pellet plant on the east coast," he said.

Nippon Steel is also considering to build a new electric furnace at its US joint venture with ArcelorMittal in Calvert, Alabama.

"We may build a furnace of 1.5 million tonnes of annual output capacity as a first step," Miyamoto said.

"Having our own iron source means a shorter lead time and fewer inventories," he said.

ArcelorMittal said in September it would sell its US assets to Cleveland-Cliffs Inc, except for some assets like the Calvert facility.

Nippon Steel is still in talks with the parties involved on whether it will keep its stake in its other US joint venture with ArcelorMittal, I/N Tek and I/N Kote, in Indiana, Miyamoto said.

Nippon Steel expects to book a net loss for a second straight year, as the Covid-19 pandemic decimated demand. Even before the outbreak, it had been grappling with falling demand at home and competition from China, which forced it to shut nearly 10% of its production capacity.