JFE Steel Signs Agreement to Expand Guangzhou JV

JFE Steel announced on Tuesday the firm signed joint venture agreement with Guangzhou Iron and Steel Enterprises Holdings to build new cold rolling mill and no.2 hot-dip galvanizing line at the joint venture, Guangzhou JFE Steel Sheet. They build cold rolling mill with annual 1.8 million tonnes of output capacity and galvanizing line with 400,000 tonnes to double the galvanizing capacity. They start the new lines in 2010 to meet growing demand for automobile and other applications. JFE Steel and Guangzhou Iron and Steel agreed for the around US$ 500 million expansion including continuous annealing line in March. They got approval for the expansion from National Development and Reform Commission on June 22. JFE Steel reduces the share in the joint venture to 50% from current 51% to expand the operation to upper stream of cold rolling. They plan half of 1.8 million tonnes of cold rolled output is high valued steel sheet for automobile and appliances, for which JFE Steel supplies the material of hot rolled coil from Japan. The joint venture procures half of the hot coil in China including mini-mill hot coil from Guangzhou Iron and Steel group’s Guangzhou Zhujiang Steel. Guangzhou JFE Steel Sheet started the no.1 hot-dip galvanizing line with annual 400,000 tonnes of output capacity in March 2006 and pumps up the operation to 230,000 tonnes in 2007 and to full capacity in 2008. The firm decided the expansion for no.2 galvanizing line to meet growing demand from local transplants of Japanese carmakers when the firm expects the capacity couldn’t meet the growing demand while the firm builds the cold rolling mill to secure the feed for galvanizing line stably.