Nippon Steel to Expand Automotive Steel Pipe Output by 75% in Indonesia

Nippon Steel announced on Friday the group’s automotive steel pipe maker, Indonesia Nippon Steel Pipe (INP) builds second plant in November-December to expand the monthly production capacity by 75% to 3,500 tonnes. INP tries to meet growing demand for local procurement by local users along with growing local demand. INP starts stainless steel pipe for automotive exhaust system with capital participation and technical support by Sumitomo Pipe & Tube and Sumitomo Corporation to follow demand in emerging market.

Indonesian production of vehicle and motorcycle keeps growing every year and reached more than 500,000 units and 5.85 million units in 2009 respectively. The number is expected to increase to 1 million units and 7.5 million units in near future. With severer regulation for exhaust gas for motorcycle, heat resistance stainless tube demand will increase. INP decided the expansion to meet the higher demand when local users expand local procurement for the parts and materials. INP eyes additional expansion depending on the demand.

INP builds new plant in existing land with 30,000 square maters and sets 2-inch electric resistance welding pipe line with monthly 1,500 tonnes of output capacity to make stainless and carbon steel tube. The new around 1.3 billion yen line will start operation in April 2011. The firm also improves productivity by integrating the small diameter pipe making at existing 3 lines into the new line. INP tries to expand the sales in 2011-2012 with severer regulation for exhaust gas for motorcycle and model changes for major cars and targets more than 2 times of sales in 2015.

INP issues new shares with US$ 3.1 million value to allocate for newly established company by Sumitomo Pipe & Tube and Sumitomo Corp. After the capital increase to US$ 11.6 million, Nippon Steel’s pipe making subsidiary, Siam Nippon Steel Pipe (SNP) in Thailand controls 69.6% with 3.7% share by Toshida Industry and 26.7% by new company of Sumitomo group.

SNP launched second plant in July 2009 to expand the monthly production capacity to 5,500 tonnes expanding the supply to Southeast Asia and India. Nippon Steel made Toshida Industry’s Wuxi subsidiary into Nippon Steel group led new company, Wuxi NSP Automotive Parts with capital participation by Sumitomo Pipe & Tube. Nippon Steel improves the pipe supply network with 4 major bases in Japan, China, Thailand and Indonesia.