Sumitomo Metals to Supply Steel Sheets to India's Bhushan Steel

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Researched by Industrial Info India (Delhi, India)--Sumitomo Metal Industries Limited (TYO:5405) (Osaka, Japan) has signed a memorandum of understanding to supply Bhushan Steel Limited (BSE:500055) (New Delhi, India) with an OEM supply of steel sheets, which will be manufactured in its steel mill in Meramandali, Orissa.

Sumitomo Metals is a supplier of sheet metal to Japanese automakers Honda Motor Company (NYSE:HMC) (Tokyo, Japan), Mazda Motor Corporation (TYO:7261) (Hiroshima, Japan), Suzuki Motor Corporation (TYO:7269) (Hamamatsu, Japan) and Nissan Motor Company (PINK:NSANY) (Yokohama, Japan). Bhushan Steel supplies automotive steel sheets for inner and outer panels to auto companies such as Maruti Udyog, Telco, Ford Motor Company (NYSE:F), Hyundai, Bajaj Auto, LML, Fiat India and Hindustan Motors. Sumitomo Metals has provided technical assistance for construction and operation of the Dhenkenal steel mill in Odisha. This memorandum of understanding will enable Sumitomo Metals to establish a supply system for high-grade steel products.

Sumitomo Metals is eying a possible stake of between 26% and 40% in Bhushan Steel's steel mill in Asansol, Bengal. Sumitomo Metals is bullish on the Indian steel industry and is looking at India as a major focus area. Bhushan Steel has had a business relationship with Sumitomo for the past 12 years, including a technology sharing agreement, which has helped Bhushan improve its bottom-line performance. Bhushan Steel has become a leader in supplying outer body sheets to the Indian car industry and the white goods industry.

Bhushan Steel is also sourcing part of its requirements for the hot-rolled coil (HRC) mill from Sumitomo. HRC is a high-end product from Sumitomo, and Bhushan Steel sells it to the various auto majors in India. Sumitomo technology is used in Bhushan's state-of-the-art HRC project. High-quality Japanese Steel carries higher prices, so the use of Sumitomo technology should allow Bhushan to sell its steel for a premium price on the Indian market.

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