Nippon Steel, WISCO to Launch Tinplate JV in Wuhan

Nippon Steel announced on Friday the firm establishes Chinese tinplate making joint venture with Chinese state owned Wuhan Iron and Steel. They build new continuous annealing and processing line with annual 400,000 tonnes of output capacity and electrolytic tinning line with 200,000 tonnes of capacity in Wuhan Iron and Steel’s works in Wuhan city, Hubey for 1.85 billion yuan to start operation in summer 2013. The joint venture provides tinplate in China and supplies black plate to Nippon Steel’s plant. Wuhan Iron and Steel provides material flat steel to the joint venture. For Nippon Steel, the joint venture is the first Chinese business scheme with procure, production and sales. Nippon Steel provides technical support to the joint venture while Nippon Steel generates earnings from the joint venture. The joint venture targets 2.5 billion yuan of annual sales when the operation reaches full capacity level.

Nippon Steel and Wuhan Iron and Steel establish the 50/50 joint venture, WISCO-Nippon Steel Tinplate with 740 million of capital as early as in June. They send equal numbers of directors for the joint venture. Wuhan Iron and Steel sends the chairman and Nippon Steel sends the president and after the management term Nippon Steel sends the chairman and Wuhan Iron and Steel sends the president to share the top management.

Nippon Steel estimates Chinese tinplate demand was 2.32 million tonnes in 2009 based on production volume by major makers. The firm expects the demand will reach 3.28-3.7 million tonnes in 2015 when the economy keeps growing at annualized 6-8%. The joint venture covers northern part of China market with 240,000 tonnes or 11% of Chinese demand and inner part of China with 230,000 tonnes or 10% of total demand in 2009. Nippon Steel expects the demand in the targeted areas will grow more than demand growth in total China.

Major tinplate plants including Guangzhou Pacific Tinplate (PATIN), in which Nippon Steel has interest, and Baoshan Iron and Steel are located in coastal China. The major makers served to the coastal area led Chinese economy growth. Nippon Steel expects tinplate demand will increase in inner China when Chinese government tries to develop inner area.

The joint venture supplies tinplate from the plant in Wuhan where is important traffic point between Beijing-Guangzhou and Shanghai-Chongqing-Chengdu. The firm tries to utilize the location advantage compared with other makers in coastal area.