Kobe Steel's Wire Rod Processing Company in China Starts Up

Kobe Steel, Ltd. announces that its joint venture, Kobelco Spring Wire (Foshan) Co., Ltd. (or KSW), has started operations in China. KSW began production of steel wire for high-quality springs in February. After obtaining product approval from its customers, KSW will go into commercial production.     

KSW was established in January 2012 in Foshan, Guangdong Province to produce and sell steel wire for high-quality springs. Capitalized at 1.3 billion yen, the company has a production capacity of 600 metric tons per month. KSW is 50% owned by Kobe Steel through subsidiary Kobelco Holding (China) Co., Ltd., Kobe Steel's China headquarters. Shinko Wire Company, Ltd. and Suncall Corporation each have a 25% equity share. The president is Hidenori Sakai.   


China, the world's largest auto market, produced about 19 million cars in 2012. Production is forecast to expand considerably over the medium- to long-term future, reaching 28 million cars in 2020.     


Consequently, world automakers have been expanding their production bases in China, raising the need for the local sourcing of parts. To meet this demand, the world's major spring manufacturers have been actively adding new production lines and increasing their capacity to make engine valve springs and other high-quality springs. This, in turn, has increased demand for high-quality steel wire, the material from which the springs are made.     


Kobe Steel has a roughly 50% share of the world market for steel wire rod, the base material for steel wire. It has earned high marks from automakers in Japan, the United States and Europe for its wire rod. Booming demand in China led Kobe Steel to form KSW, its first overseas company to process wire rod into wire for use in engine valve springs and other high quality spring products.   


Kobe Steel already has two companies in Thailand, one in the United States, and three in China that process steel wire rod for suspension springs and CHQ (cold heading quality) wire rod for fasteners. Through KSW, Kobe Steel, along with the equity participation and cooperation of wire rod processors, is strengthening its wire processing base and building a global supply network to supply high-quality special steel products.