Baosteel-NSC/Arcelor Automotive Steel Sheets with 9.1 Billion Yuan Sales in 2006

Baosteel-NSC/Arcelor Automotive Steel Sheets, a joint venture between Nippon Steel and Bao Steel to produce automotive steel sheet, expects 9.1 billion yuan (about 143 billion yen) of annual sales and over 300 million yuan of net profit in 2006. The JV’s profits will turn into black. The JV started operation in 2005 with a target to gain profits after 3 years. The JV expects to achieve the target ahead of schedule. The JV estimates the selling volume in 2007 keeps the same level in 2006 because the JV continues full operation. However, the JV will increase the sales of high grade steel sheet for Japanese automakers and aims profit growth. The JV produced 1.8 million tonnes of steel sheet in 2006 which exceeded official production capacity at 1.7 million tonnes. The sales rate for automobile was over 50%. The JV almost finished steel grade authentication procedure by Japanese automakers and soon gets authentication for automobile components. Consequently the JV can increase the production and sales for high grade steel products for Japanese automobile makers in 2007. Its agenda is the improvement of productivity including process yield due to the increase of high technology products. The JV has the cold rolling mill with 1.7 million tonnes of annual output capacity, the hot dip galvanizing line specialized for automobile with 450,000 tonnes of annual capacity and continuous galvanizing line for building material and consumer electronics with 350,000 tonnes capacity. The JV will reorganize the product lineup with expansion of automotive sales, including establishment of new lines to meet increasing demand from Japanese and Chinese automakers movement who would shift to use galvanized steel sheet more.