Kobe Steel to Establish Welding Company in China

Thursday, 21 February 2008, 18:58 HKT/SGT

Kobe, Japan, Feb 21, 2008 - (ACN Newswire) - Kobe Steel, Ltd. plans to establish a company to produce welding materials in Qingdao, Shangdong Province, China. The new company will make flux cored welding wire for welding carbon steel used in shipbuilding.

Called Kobe Welding of Qingdao Co., Ltd., the joint venture will be formed in April 2008. Production is scheduled to begin one year later, in April 2009. The plant will have a capacity of 1,000 metric tons per month.

Kobe Welding of Qingdao, to be capitalized at 3 billion yen, will employ about 90 people. Kobe Steel will have a 90% share in the venture and subsidiary Shinsho Corporation 5%. Sojitz Marine & Engineering Corporation and Tokokosen Corp. will each have 2.5%.

In the 1980s, Kobe Steel pioneered the development of flux cored welding wire for carbon steel and widely promoted its commercial application. This technical breakthrough streamlined welding in the shipbuilding industry. Today, flux cored welding wire is an essential material in the construction of large ships.

Flux cored welding wire for carbon steel is commonly used in shipbuilding and offshore marine structures, such as oil rigs. In recent years, demand has been growing for this welding consumable. As one of the leading producers of flux cored welding wire, including that for specialty steel, Kobe Steel has been increasing its production capacities for this material at its plants in Japan, China, South Korea and Europe.

China is the largest market for welding consumables, using an estimated 2.5 million metric tons of welding materials of various types per year. China's shipbuilding capacity is anticipated to steadily grow, with capacity in 2010 expected to double, in comparison to 2007. In addition, the use of welding electrodes in shipbuilding is shifting to high-efficiency flux cored welding wire for carbon steel. As a result, Kobe Steel predicts that demand for flux cored welding wire will increase sharply.

In recent years, Japanese and Korean shipbuilders have been setting up operations in eastern China, where Kobe Steel is planning to locate its new joint venture. Existing shipyards are also expanding their production capacities. By establishing a new manufacturing plant for welding consumables in China, Kobe Steel will be able to strengthen its supply capability and technical services in that country.

About Flux Cored Welding Wire

Flux-cored welding wire consists of a steel sheath with flux in the middle. This type of wire is generally around 1.2 mm to 1.6 mm in diameter. Flux contains a deoxidant, slag generator, arc stabilizer, alloys, steel powder and other substances. Flux composition contributes greatly to the mechanical properties, welding workability and other capabilities of the welding wire.

About Kobe Steel, Ltd.

Kobe Steel, Ltd. is Japan's top producer of welding consumables. It is also one of Japan's leading steelmakers and producers of aluminum and copper products. Other businesses include industrial machinery, engineering, construction equipment, and electronic materials. More information is available at: www.kobelco.co.jp .

For more information, please contact:
Gary Tsuchida
Publicity Group, Kobelco
Tel: +81-3-5739-6010
Email: appress@kobelco.com

Topic: Business Plan
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From the Asia Corporate News Network