Angang, Kobe to build $287 mln automotive steel plant in China

TOKYO Thu Oct 17, 2013 7:40am EDT

TOKYO Oct 17 (Reuters) - Japan's Kobe Steel Ltd is teaming up with a local partner to build a plant in China costing some 1.75 billion yuan ($287 million), aiming to meet growing demand for automotive sheet steel.

Kobe Steel's decision to form a joint venture with China's Angang Steel Co Ltd comes as the latest move in a global expansion by Japanese steel makers aiming to increase their presence in growing markets such as China, the world's top automobile market.

Japan's top steel maker, Nippon Steel & Sumitomo Metal Corp , said last month its joint venture with China's Baoshan Iron & Steel Co Ltd will spend 1.1 billion yuan ($180.3 million) to boost output of automotive steel sheet to grab a bigger slice of the market.

Kobe, Japan's No.3 steel maker, said the venture, Kobelco Angang Auto Steel Co Ltd, will be capitalised at 700 million yuan. The venture, 51 percent owned by Angang and 49 percent by Kobe, plans to build a new line with an annual production capacity of 600,000 metric tonnes at Angang's steel plant in Anshan, Liaoning Province.

It aims to start producing cold-rolled high-strength steel sheet in early 2016.

"China's car production is anticipated to increase by roughly 50 percent to 30 million by 2020," Ikuhiro Yamaguchi, executive vice president of Kobe Steel, told a news conference.

"Given government efforts to improve safety and environmental standards for automobiles, demand for stronger, lighter and more flexible steel sheet will likely grow rapidly," Yamaguchi added.

The joint venture aims to supply steel sheet not only to Japanese automakers, but also European, American, South Korean and Chinese makers, he added.

Japanese steel makers have also been accelerating expansion elsewhere around the world. Nippon Steel began producing automotive steel pipes in Mexico in May, followed by the start of mass production of automotive steel pipes in India in June.

JFE Steel, a unit of JFE Holdings Inc, said in June it would build a galvanizing line for automobiles in Indonesia. ($1 = 6.0995 Chinese yuan) (Editing by David Holmes)

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