Ikeuchi Seiko Establishes Finished Steel Bar Plant in China

Ikeuchi Seiko, Japanese finished steel bar maker, announced on Tuesday the firm and Sumitomo Corporation, Japanese major general trader, cooperatively establish a special steel bar processing company in Guangdong province, China. This is the first offshore plant for Ikeuchi Seiko. The JV will be established in October 2010 and start operation in October 2011 to follow the local demand mainly from Japanese automakers’ plants. The JV’s capacity is scheduled at 18,000 tonnes per year for the size with 6-24 millimeters diameter on the first phase. Investment for the first phase is 1.2 billion yen.

The plant will be constructed on the land of 20,000 square meters. The plant will have 30 employees and 2 continuous drawing machines. The investment ratio is 60% by Ikeuchi and 40% by Sumitomo Corp. The JV eyes material procurement from both Japanese steel makers and Chinese steel makers. The plant will start production of steel wire for cold forged products in the second phase.

In South China, Nissan Motor, Honda and Toyota Motor have auto factories. Mr. Hisaichi Sekiya, president of Ikeuchi said 3 automakers are expected to produce 2 million cars per year. Mr. Sekiya expects European and American car makers will also establishe car factories in South China. Japanese car makers enhance production in China and purchase of local materials. Price competition is severe even for special steel products.