JFE Steel Invests in Chinese Seamless Steel Tube Processor

JFE Steel announced on Monday the firm concluded a contract to invest in Pancheng Yihong Pipe (PYP), Chinese processor to thread oil well steel tubes. JFE Steel supports PYP’s capital increase and acquires 24% stakes of PYP. PYP becomes JFE Steel’s equity method affiliate. JFE Steel licenses steel tube jointer technologies including “FOX” and “JFE BEAR” to PYP. PYP plans to raise processing capacity of threaded oil well tubes to 330,000 tonnes per year from present 230,000 tonnes.

PYP was established in 2005 invested by Pzh Steel with 60% shares and Marubeni-Itochu Steel with 40%. The firm has 3 thread cutting lines and processes seamless tubes for oil wells produced by Pzh Steel. The employee number is about 500. The processing volume was 180,000 tonnes in 2009, down by 10% from 2008. The sales were 25 million yuan (approximately 3.5 billion yen) in 2009.

Controlling shares change to 51% for Pzh Steel, 25% for Marubeni-Itochu and 24% for JFE Steel. PYP tries to expand market share of high quality oil well tubes in China taking advantage of JFE Steel’s technology and full capacity utilization. JFE Steel enhances global supply system of seamless steel tube through alliances with overseas makers. JFE Steel aims to increase the sales in China by coupling the firm’s 13% chrome seamless tube and PYP’s threading seamless tubes.