Nippon Steel, partners to expand output in China

Tokyo, Apr 12: Nippon Steel Corp, China's Baosteel Group Corp. and Arcelor Mittal have agreed to expand production capacity at their joint venture in China, an industry source said on Thursday.

The head of the three companies met in Shanghai and agreed to boost capacity at Baosteel-NSC/Arcelor Automotive Steel Sheet Co (BNA) in response to strong demand for automotive steel sheet in China, said the source who asked not to be identified.

The venture has been operating at full capacity as Japanese car makers such as Honda Motor Co. , Nissan Motor Co , and Toyota Motor Corp. are stepping up production in the country, and there have been requests from automakers to boost output.

The Nikkei business daily reported earlier the companies would likely invest about 50 billion yen (8.9 million) to double output capacity by adding new production lines, and the operation could start in 2009.

The source said details were still unknown.

BNA is 50 percent owned by Baosteel, 38 percent by Nippon Steel and 12 percent by Arcelor Mittal.

Japanese automakers in China currently import most of their steel from Japan, citing the inferior quality of locally made products, and are keen to see Japanese steel makers set up shop and raise output in China to lower production costs.

Reuters