Sumitomo Pipe & Tube Expands Production Capacity in Overseas Markets

Mr. Mitsuru Maruo, president of Sumitomo Pipe & Tube, Japanese major steel tube maker, told at an interview with Japan Metal Bulletin that the firm accelerates offshore investments while restructures domestic production system in fiscal 2011 ending in March 2012 when steel pipe users are advancing offshore operations and increasing local material procurement. Mr. Maruo described Guangzhou You-Ri Automotive (GYA), the subsidiary in China, completes installation of no.2 pipe manufacturing line and additional four pipe cutting machines in July and GYA’s production capacity increases to 3,000 tonnes per month from previous 1,500 tonnes. He also said GYA will install a supersonic flaw detector in October to strengthen quality control. He also referred Seymour Tubing, another subsidiary in the U.S.A., completed closure of Dunlop factory in Indiana and concentrated production equipments to Indiana factory until April. Indiana factory renewed old facilities and finished expansion of production capacity.

In Japan, Mr. Maruo said, Osaka factory closed no.1 tube manufacturing line at the end of September 2010 and the operation was integrated to Wakayama factory. He revealed the firm examines additional optimization of domestic operations for better productivity.

Mr. Maruo explained the firm needs to reduce electricity usage by 15% for July-September when Japanese government requires electricity conservation in summer. Along the governmental policy, Kashima works changes non-business days of the manufacturing department to Friday-Saturday from usual Saturday-Sunday.

He explained about the current operative conditions of the firm’s main plants. GYA and Seymour Tubing maintained favorable sales and profits in 2010 though the operations represented below 50% for April-June due to the impacts of Japan Earthquake. The operating rates are expected to improve step by step since Japanese automobile makers steadily recovers productions for July-September. Sumitec Tube, the domestic tube drawing subsidiary, also enjoyed healthy sales and profits in fiscal 2010 ended in March 2011. Mr. Maruo said the domestic demand turned severe for April-June due to confused supply chain but the market is expected to rebound in the last half of fiscal 2011. He also showed an expectation for the demand generation for steel tubes used in general structures and gas pipes along with rehabilitation of the disaster areas in and after the last half of fiscal 2011.

As for overseas operations, Mr. Maruo referred the firm established a production and sales base of automotive steel tube in Chennai, India in cooperation with Sumitomo Corporation and Hyundai Hysco with around 3.6 billion yen investment. Sumitomo Pipe & Tube is focusing on Indian market where the demand is expected to expand with large population. He explained Sumitomo Pipe & Tube agreed with Hyundai Hysco in the establishment of the JV company since Hyundai Hysco has already operated a coil center in South India and mulled establishment of a new steel tube plant to supply the products to Hyundai Motor. Sumitomo Pipe & Tube aims the product supply to Japanese and European automakers and will start the operation in late 2012.