Nippon Steel Advances Investment for Overseas Re-rollers

Nippon Steel is accelerating investment and collaboration with offshore re-rollers to follow the demand growth for hot rolled coil at overseas. Nippon Steel announced on Friday the firm acquires the shares in Yung Kong Galvanizing Industries (YKGI) of Malaysia in June 2010. Nippon Steel will subscribe for redeem convertible preference shares to be issued by YKGI in June 2010 and take approximately 10% shares at 340 million yen. Nippon Steel will supply hot coil to YGKI, which will account for 50% or more for YGKI’s total production.

Nippon Steel invested in Safal Steel of South Africa in December 2008 while acquired Indonesian tin plate maker, Latinusa in November 2009. Nippon Steel also announced investment in Malaysian electrogalvanizing sheet maker, E Galva in December 2009 and Vietnamese contractor, PEB Steel Building in January 2010. Nippon Steel has agressively advanced overseas market development along its global player strategy.

YKGI, established in 1977, started production of hot dipped steel sheet in 1984. The capital fund is 106 million Ringgit (approximately 2.8 billion yen). The consolidated sales was 341 million Ringgit (approximately 9 billion yen) in 2009. YKGI operates 2 plants with total capacity at 300,000 tonnes per year for pickling sheet, 250,000 tonnes per year for cold rolled sheet, 250,000 tonnes per year for continuous galvanizing lines and 90,000 tonnes per year for collaring lines.

Steel demand is expected to grow up in Malaysia. Malaysian domestic market of hot dip galvanizing sheet is around 900,000 tonnes per year, 750,000 tonnes of which is for building constructions. The market is almost dominated by domestic 6 hot dip galvanizing sheet makers since import tax is as high as 25%.

Siam United Steel, Nippon Steel’s subsidiary in Thailand, had supplied cold rolled sheet to YKGI. YKGI established its own cold rolling mill in 2007 and started hot coil purchase from Nippon Steel.