Kobe Steel Aims 1.5T Yen Sales for Steel Division by Overseas Business

Vice president of Kobe Steel, Ikuhiro Yamaguchi said Kobe Steel aims consolidated net sales of 1.5 trillion yen and recurring profit of 100 billion yen for the steel division 5-10 years later. Mr. Yamaguchi said the firm increases direct export and offshore production of “only one products” including high tensile steel sheets, special steels or electro galvanizing sheets to follow overseas demand growth. He also showed an expectation for profit growth by cast and forge steels, titanium and electric power businesses.

Mr. Yamaguchi said the export ratio approached 30% of the steel division’s total sales in the second half of fiscal 2009 (October 2009-March 2010) and the ratio is expected to exceed 30% in fiscal 2010. For a medium term, Kobe Steel will raise the export rate to near 40% and increase overseas sales and profits as well as by expansion of offshore joint ventures such as PRO-TEC Coating, a galvanizing sheet maker in USA.

Mr. Yamaguchi explained Kobe Steel doesn’t plan to construct upstream special steel plants in China with concerns about technology outflow while examines the business expansion in India or Southeast Asia. He said the firm may increase output capacity at special steel processing plants in China and Thailand. As to special steel wire for cold rolling products, he said the firm continues the export because wire rod production is difficult at overseas. The firm will enhance the supply chain through tie-up with Grand Blanc Processing in Detroit and Japanese steel processors’ local sites.

Mr. Yamaguchi said the firm eyes facility expansion for high tensile steel sheet in Kakogawa Iron Works or construction of the plant in Asia. He referred to partnership with Essar of India that they may mull joint business of automotive steel sheet in future.

As to the plan to construct a continuous annealing line in PRO-TEC, Mr. Yamaguchi explained Kobe Steel will make a formal decision within 2010 when US automakers schedule car model changes for 2013-2014. In Europe, he described Kobe Steel is serving its technology for high tensile sheet and anti-finger mark sheet applied to electric appliances to VAK in Austria and pursues synergies including establishment of a joint company.

Kobe Steel started feasibility study of ITmk3 plant construction in Vietnam. Mr. Yamaguchi said the firm utilizes new reduced iron plants, ITmk3 to steel business, which can build up integrated special steel plants with electric furnace and continuous casting, rolling mills. He said the firm examines joint businesses with overseas electric furnace steel makers in other areas.