Japanese Auto Makers Drive $200 Million Steel Sheet Plant JV in China

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Guangzhou, in China's booming Guangdong province, is fast becoming a major manufacturing hub for the country's automotive industry. With three of the largest Japanese automakers - Honda, Toyota, and Nissan - already having established plants in the city the market for high-quality sheet steel has been accelerating.

This demand has brought Japan's JFE Steel Corporation (Tokyo, Japan) into a joint venture company with the local Guangzhou Iron and Steel Enterprises Group (Guanggang). The two parties established the JV, Guangzhou JFE Steel Sheet Company, in September 2003, and are now moving on their first project, a hot-dip galvanized steel sheet line with a capacity of 40,000 tons per annum. The plant is scheduled to start production at the end of 2005.

A spokesman for Guanggang said that the JV would provide high-quality automobile sheets for high-end automakers. He said that JFE is the long-term supplier for Honda, and the JV will continue the cooperation with Honda and develop partnerships with Toyota and Nissan. The new company will also maintain supplies of sheet steel to the stable customer base already established built by Guanggang. A total of $200 million has been invested by the Sino-Japanese company in the first phase of the zinc-coated sheet line plant construction, with JFE holding 50% and Guanggang, 49%.

Looking at further developments the partners are cooperating on a feasibility study begun in August 2004 to examine the potential for an integrated steelworks in the Nansha Development Zone, Guangzhuo City, where the steel sheet plant is sited. The study will examine the scale of production, equipment and facilities, and the scale of investment required. It is scheduled for completion in August 2005. If the results are positive, the next project for the JV will be cold rolled plate production lines, with an annual capacity of 1.5 million tons a year.

Guanggang is planning to relocate all of its existing plants to Nansha as requested by the economic development plan of Guangzhou City, reports Interfax. The local government is planning to rezone areas where sport events will take place during the Asian Games in 2010, which affects the company's present location and limits scope for expansion.

Guanggang is South China's leading steel maker and the 25th largest in the country and has a current production capacity of 1.5 million tons of steel products a year.

The JFE Steel Corporation grew out of a consolidation of Kawasaki Steel and NKK which happened in 2003. The Japanese group's domestic production at its East and West steel production complexes totals over 25 million tons per year, with additional major world-scale output of tubing, pipes and steel products from other plants. The JFE Group consists of JFE Holdings, JFE Engineering, JFE Urban Development, Kawasaki Microelectronics, and JFE R&D.

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