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Kobe Steel to form joint venture to process wire rod for automotive suspension springs in Jiangsu, China
June 21, 2005

Kobe Steel, Ltd. plans to establish a joint venture to process special steel wire rod for automotive suspension springs in Jiangsu Province, China.

Kobe Steel, wire rod processor Sugita Wire, Ltd., and trading firm Mitsui & Co., Ltd. are expected to have an 85% share in the venture.  China's Jiangyin Hongsheng Co., Ltd., a company that invests mainly in the steel processing industry, will hold the remaining 15%.  The joint venture will produce and market oil tempered wire for supply to manufacturers, who will turn the wire into cold-coiled suspension springs.  

Approximately 1.9 billion yen will be invested in the project.  The joint venture, to be capitalized at 760 million yen, will be established in July.  Production capacity at start-up, scheduled for October 2006, will be 600 metric tons per month.  The joint venture will have 60 employees.  

Owing to strong economic growth, automobile production in China is anticipated to reach 10 million units in 2010, in comparison to the 5.1 million cars made in 2004.  Annual demand for suspension springs, a critical part in cars, is forecast to increase to 62,000 metric tons, up from the estimated 24,000 tons in 2004.

In the southern province of Guangdong, Kobe Steel established Kobe Wire Products (Foshan) Co., Ltd. for the secondary processing of cold-finished steel bar for hot-coiled suspension springs. It will also supply cold heading quality (CHQ) steel wire, which will be turned into high-quality nuts and bolts.  This company will go into operation in April 2006.  

Kobe Steel is renown for its high-quality special steel wire rod for the automotive industry.  The top maker of spring steel, Kobe Steel has licensed its UHS1900 high strength steel for suspension springs to Ascometal SA in France and Republic Engineered Products, Inc. in the United States.  In Thailand, affiliate Mahajak Kyodo Co., Ltd. produces cold-finished steel bar for suspension springs.


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