Kyoei Steel to Expand Rolling Capacity by 30% in 3 years

Kyoei Steel’s Vietnamese rolling plant, Vina Kyoei Steel expands the output capacity of concrete reinforcing steel bar and wire rod by around 30% to annual 400,000 tonnes under 3-year plan from fiscal 2008. The firm utilizes the capacity fully by improving the roughing mill capacity and operation efficiency to meet strong construction market, which grows by more than 10% per year. The firm tries to improve the quality and cost structure and keeps study to add steel making shop or rolling line depending on the market. The firm produces monthly 30,000 tonnes of products, of which rebar represents more than 80%, with offshore sourcing billet. The firm increases the output to 155,000 tonnes in January-June, which was 3.5% higher than same period of 2006, under firm demand. The output could exceed 300,000 tonnes for the year. The firm said the cost competitiveness is domestic top level due to highest 94% of capacity utilization and depreciated facility. The firm tries to improve the supply ability by minimum investment to avoid excess capacity when domestic rivals expand the capacity. The firm is willing to add electric furnace to secure steel source stably when the offshore billet market gets unstable in price and quality. However, the country depends the ferrous scrap source on import heavily. The firm keeps study to find the way to secure raw materials and to watch market condition for the expansion. Vietnamese construction steel demand increased by 10% to 3.8 million tonnes in fiscal 2006 from previous year. Especially, rebar demand increased by around 70% to 2.7 million tonnes when building construction increases under the annualized 8% growth economy. Vietnam Steel Association expects the domestic steel demand increases by 13% to 4.3 million tonnes in 2007 from 2006.