Japan Automakers to Use More Local Steel at China Plants

Chinese transplants of Japanese automakers increase consumption of local steel products at rapid pace under severe competition and high yen rate. Nissan Motor and Toyota Motor try to shift to 100% local procurement for the steel. The move would encourage Japanese steel makers to accelerate local production in China.

Chinese transplants of Japanese automotive parts makers also increase local steel consumption. A source in Shanghai office of Japanese steel maker said 70-80% of steel demand from Chinese transplants of Japanese automakers is for Chinese products and some models use 95% for Chinese steel products.

A source in Shanghai office of Japanese special steel maker said Japanese automakers started to shift to local steel procurement in 2011. The automakers try to secure local materials after the major earthquake in 2011 and historical high yen rate.

Chinese joint ventures of Japanese steel makers are categorized as local steel suppliers. Japanese automakers’ local procurement represents the purchase from such joint venture now. However, Chinese joint venture partners of transplants of Japanese automakers try to use Chinese steel products as much as possible. Japanese steel makers try to expand technology advantage against Chinese steel makers to secure the order.