POSCO and China’s second-largest steelmaker HBIS inked a deal to establish a $600 million joint venture in China to produce and sell automotive steel sheets, the company said.
The deal was sealed between POSCO’s steel business unit head Kim Hag-dong and HBIS Group General Manager Wang Lanyu, in an online meeting attended by POSCO Chairman Choi Jeong-woo and HBIS Group President Yu Yong, Friday, to set up a 50-50 joint venture in Laoting in China’s Heibei province.
“Through the partnership with HBIS Group, we plan to strengthen our position as the most competent automotive steel sheet supplier in China, the world’s largest market for automotive steel sheets,” Choi said after signing the deal with HBIS.
HBIS Group is China’s second-leading steelmaker and the world’s third-largest, capable of producing 44 million tons of crude steel. POSCO and the Chinese company are listed on the Fortune Global 500 list in 2020.
The two steel giants will invest a total $600 million, or $300 million each, to build a steel sheet production plant capable of producing 900,000 tons in Tangshan, Heibei province.
The construction of the plant is scheduled to start in January next year with the goal of completion by the end of 2023.
In addition, POSCO plans to incorporate its Guangdong CGL as a subsidiary company into the joint venture. The plant is capable of producing 450,000 tons of steel sheets annually.
With the incorporation, the venture will be able to produce 1.35 million tons of steel sheets.
Choi said his company’s partnership with HBIS Group could help strengthen its position as a leading supplier of automotive steel sheets in China.
Through the cooperation with HBIS, POSCO plans to better meet the rise in steel sheet demand in China and to establish a secure supply system.
China is expected to show continuous growth along with the rise in demand for automotive steel sheets in the region, POSCO said.
According to IHS, China’s automotive steel sheet market is expected to show an annual production of 30 million vehicles by 2030, taking over the top seed in the global market. China took up 32 percent of global automotive production last year by producing 25 million vehicles.
“POSCO plans to secure a production and sales structure through the joint venture with HBIS in China, where the demand for automotive steel sheets continues to rise, and plans to become a leading supplier of steel sheets and maintain our first tier status,” a POSCO official said.
Shares in POSCO rose 0.57 percent to 352,000 won ($312), Friday.
www.ferroalloynet.com
