Sumitomo Corp. to Launch Construction Steel Sales JV in Vietnam

Sumitomo Corporation and Sumitomo and the construction steel selling subsidiary, Sumisho Tekko Hanbai announced on Monday they establish joint venture with local major dealer of SMC in Ba Ria Vung Tau, Vietnam to distribute and process construction steel products. They try to follow growing demand for construction steel. Sumitomo Corp. tries to increase the presence in Southeast Asia through joint effort with the group companies.

SMC has 50% share in the joint venture, SMC-Summit with around US$ 4 million of capital. Sumitomo Corp. has 30% share and Sumisho Tekko Hanbai has 15% share, Sumitomo Corp.’s Vietnamese subsidiary has 5% share in the joint venture.

The joint venture starts operation in April targeting 50,000 tonnes of sales in 2012 as the first operation year. The firm tries to make money in the second year and realize 150,000 tonnes and 10 billion yen of sales in 2014.

The joint venture secures existing warehouse on 2,400 square meters of land in SMC’s land. The joint venture starts processing operation after introduction of 20 cutting and bending machines in May. The firm eyes expansion on total 7,000 square meters of land depending on local demand.

The joint venture deals and processes concrete reinforcing steel bar, rebar joint, pipe pile and other construction steel products. The firm develops local market for high grade steels in high rise building and civil works. The firm tries to establish the presence as general provider for construction materials when Vietnamese market uses more steel in structure and society.

Sumitomo Corp. estimates Vietnam consumes around 5 million tonnes of rebar per year. The firm expects the demand increases to 8 million tonnes level in 2013-2014 under major building construction and construction of infrastructures including sewerage, subway and highway.