JFE Holdings Inc., Japan’s second- biggest steelmaker, will push back a decision on whether to build a $3.6 billion integrated steel mill in Vietnam, its first outside Japan, as it assesses competitive risks.

"We initially said a conclusion will be reached by the end of this year, but we’ll need a bit more time," Eiji Hayashida, president of steel unit JFE Steel Corp., said in an interview Dec. 5 at the company’s Tokyo headquarters. "Things won’t go smoothly until we make sure that we’ll beat the competition as many projects are being lined up to build new mills in southern China and Vietnam."

JFE’s plan is part of a push to be closer to customers in markets where demand is surging for Japanese products such as cars. The company’s challenge will be to cope with the high cost of setting up a plant at a time when China’s slowing economy is causing a glut, said Shinya Yamada, an analyst with Credit Suisse Securities Japan Ltd.

"It’s no use to go ahead with the project when the industry is struggling with excess steel supply," said Yamada, who has an outperform rating for JFE shares. "The risk is high..."

Click here to continue reading this Bloomberg Businessweek article.