TOKYO (Reuters) - Kobe Steel Ltd, Japan’s No.3 steelmaker, and United States Steel Corp said on Tuesday that their U.S. joint venture will spend $400 million to boost output capacity of high-strength steel amid growing demand from automakers.
The move comes as automakers in the U.S., the world’s second-biggest auto market, increasingly turn to the lighter metal to meet stricter environmental rules.
The 50-50 joint venture, PRO-TEC Coating Company, will begin construction of a new continuous galvanizing line in its steel plant in Leipsic, Ohio, with an aim to start operation in 2019.
The company, which sells products to Japanese and U.S. automakers in North America, plans to increase annual output of hot-dipped, galvanized high-strength steel by 0.5 million tonnes to 2 million short tonnes.
“Automotive steel is required to be strong and have high formability for use in a growing number of applicable auto parts,” Yoshinori Onoe, executive vice president of Kobe Steel, told a news conference in Tokyo.
“As the U.S. standards regulating fuel efficiency become stricter, car bodies need to become lighter and safer, which means demand for galvanized higher-strength steel used in the car body structure will likely increase in the future,” he said.
Kobe Steel, which also makes aluminum automotive products, sees high-strength steel will be mainly used in car body structures where strong safety in cases of collision is required, while aluminum and resin will be increasingly used in panels such as rooftops and doors, Onoe said.
Reporting by Yuka Obayashi; Editing by Kim Coghill