Kobe Steel announced on Thursday the firm decided additional capital expenditure at Chinese subsidiary to manufacture forged aluminium components for automobiles, Kobe Aluminum Automotive Products (China). KAAP China is now under construction toward commencement of the first commercial production while Kobe Steel decided to install additional facilities and to double the output capacity. Melting and casting processes will also be introduced to establish integrated production lines at KAAP China. The additional capex is estimated at approximately 4.5 billion yen.
KAAP China was established in Suzhou, Jiangsu Province in September 2010. The company has installed a 6,300-tonne mechanical press machine and a heat treatment equipment to prepare for commercial production starting in August 2012. With the additional capex, the same press machine and heat treatment equipment will be introduced. The output capacity of forged aluminium parts for automotive suspensions will almost double to 250,000 sets per month from initially scheduled 120,000 sets per month. KAAP China will also construct upstream processes including a melting furnace, casting line and billet processing line. KAAP China can reuse factory-generated aluminium scrap by these facilities. The productivity is expected to improve. Commercial operation of initially scheduled facilities will start in August 2012 and added lines will enter operation in March 2013. Total capex is 7 billion yen including additional 4.5 billion yen. Major automakers of Japan, Europe and the U.S.A. are aggressively increasing local car productions in China where the car market size became the world largest. Meanwhile, the government’s environmental control policy is stimulating demand for low-weight automotive components. In China, shipment of forged aluminium parts for car suspensions is strongly increasing more than expected.