Nippon Steel, Tata Steel Sign CAPL JV Agreement in India

Nippon Steel and Tata Steel of India announced on Friday they signed joint venture agreement to make automotive cold rolled flat steel at Jamshedpur works of Tata Steel. The joint venture builds Indian first continuous annealing and processing line with 600,000 tonnes of annual output capacity for around 40 billion yen starting the commercial operation in autumn 2013. The joint venture provides high grade automotive steel to local transplants of Japanese automakers and local makers. Nippon Steel and Tata Steel continue talk for potential other joint venture including blast furnace and upper stream operations.

They continued talk for the detail after the memorandum of understanding in April 2010. They establish the joint venture with 8.7 billion rupees of capital in March 2011 to build the new facility. Tata Steel controls 51% of the joint venture with 49% share by Nippon Steel. Tata Steel expands the annual raw steel output capacity of Jamshedpur works by 3 million tonnes to 10 million tonnes by end of 2011. The works provides major part of the material cold rolled steel to the joint venture.

They expect Indian automotive flat steel demand will increase to 1.4 million tonnes in 2015 from 1 million tonnes now when Indian automobile production increases by annualized more than 20% and reaches 3.5 million units in 2015 compared with 2.35 million units in 2009. Tata Steel, which already has 40% of the domestic automotive flat steel market share, tries to follow the growing demand and improve the grade through the joint venture. Tata Steel expects the joint venture reaches full capacity operation and planned products mix in 13 months from the start.

Nippon Steel has more than 30 years relationship with Tata Steel through technical support to Tata Steel’s cold rolling mill started in 2000 and advice on expansion of existing works and new steel projects. Nippon Steel expects the alliance with Tata Steel contributes to stability and competitiveness of the joint venture.

Nippon Steel has major alliances with major local steel makers in China, Brazil and Mexico to supply high grade automotive flat steel to local automobile plants. JFE Steel, Sumitomo Metal Industries and Kobe Steel have also alliances with Indian makers to serve Indian automobile industry. Japanese major steel makers try to follow growing demand in emerging countries through the tie-up with local makers.