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Kobe, Angang fashion auto steel joint venture in China

Keywords: Tags  steel, Kobe Steel, Angan Steel, automotive sheet, cold-rolled sheet, high-strength steel, China venture, Kobelco Angang Auto Steel continuous annealing line

NEW YORK — Japan’s third-largest steelmaker has teamed with China’s sixth-largest steel producer to tap into a projected surge in demand for cold-rolled high-strength steel driven by the anticipated high-gear growth of China’s automotive industry.

Tokyo-based Kobe Steel Ltd. and Angang Steel Co. Ltd., a subsidiary of state-owned Anshan Iron & Steel Group Corp., signed a joint-venture agreement Oct. 17 to establish Kobelco Angang Auto Steel Co. Ltd., a China-based joint venture that will produce and sell advanced cold-rolled high-strength steel sheet for automotive use.

Plans call for the construction of a 28.9-billion-yen ($295-million), 600,000 tonne-per-year continuous annealing line within Angang’s steel works. Production of cold-rolled high-strength steel with a tensile strength of 590 megapascals or higher is expected to begin in early 2016, with Angang supplying the required hot-rolled substrate to feed the new joint venture.

"The joint venture will market to essentially all automakers in China—Japanese, European, American, Chinese, etc.," a Kobe spokesman told AMM. "The product is for the Chinese market. There are no plans to supply other markets."

China is the world’s largest automobile market, according to the Japanese steelmaker, sharing the rationale behind the move. Car production there is expected to increase roughly 50 percent over the next 10 years, the company added.

Kobelco Angang Auto Steel, in which Angang holds a 51-percent interest and Kobe Steel expected to hold the remaining 49-percent share through Kobelco (China) Holding Co. Ltd., will be based at Angang’s steel works, Anshan Base in Anshan, Liaoning province.

Kobe Steel’s investment in China and that country’s auto market is the latest in a series of strategic initiatives undertaken by the Japanese steel industry, which after decades of deflation and economic stagnation has been energized by the fiscal policies of Prime Minister Shinzo Abe. Japan’s steel industry—newly remade through the megamerger of Japanese steelmakers Nippon Steel Corp. and Sumitomo Metal Industries Ltd. (now Nippon Steel & Sumitomo Metal Corp.), refocused on the emerging markets of the Association of Southeast Asian Nations region and always resilient—has pivoted to the East in search of growth. 

An AMM special report, A New Dawn for Japanese Steel, gives a closer look at the strategies, players, challenges and competition of the new Japanese steel industry.

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