Citigroup (C), JPMorgan (JPM) Say Nippon Steel, Sumitomo Merger Cost Effective

Analysts at Citigroup (NYSE:C) and JPMorgan (NYSE:JPM) say the merger between Nippon Steel Corp. and Sumitomo Metal Industries Ltd. could save up to ¥100 billion.

"The integration will create an added cost savings of ¥100 billion over the next three years," said Toshiyuki Johno, a Tokyo-based analyst at Citigroup Inc, adding it may generate ¥2,000 for every metric ton of crude steel produced, based on estimated combined annual output of about 50 million tons.

The deal, which will combine Japan's largest and third-biggest mills, is aimed at gaining leverage over raw material purchasing and prices as costs soar. The likely cost savings compare with about ¥1,600 per ton of steel created from Mittal's takeover of Arcelor in 2006 to create ArcelorMittal (NYSE:MT), Nomura Securities Co. said.

The savings from combining production, cutting costs, unifying procurement and expanding sales will be between ¥75 billion to ¥100 billion, said Yuji Matsumoto, an analyst at Nomura.





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Cheniere Energy (AMEX:LNG) Shares Soar Citigroup (NYSE:C) Upgrade

Shares of Cheniere Energy (AMEX:LNG) soared Monday, as Citigroup (NYSE:C) upgraded the company from "Hold" to "Buy."

This comes on the heels of recent news that the chances of Cheniere Energy proposed liquefied natural gas export plant in Louisiana being approved were given a boost, as the company signed a deal with Japan's Sumitomo Corp. to sell the last of the initial export capacity at the project.

Under the terms of the agreement, Sumitomo would acquire 1.5 million tons annually of LNG capacity at the plant. There is one of a series of nonbinding agreements Cheniere has recently signed with probable customers.

Cheniere Energy closed Monday at $7.31, gaining $0.97, or 15.30 percent.