China's growing automobile industry to give birth to new steel company

Kobe Steel Ltd. and China's Anshan Iron and Steel Group Corp. are in negotiations to possibly work together to manufacture and sell high end steel for automobiles in China. This news about a joint venture between the two companies was announced on Tuesday.

The specific terms of the joint venture have not yet been discussed; however, the two companies working together could mean a great opportunity for the production of advanced high-end and high-strength steel for the use in making more durable and safe automobiles. Kobe Steel said in a statement that the reason the two companies are discussing joining forces is to respond to Japanese steelmaker’s notion that China automobie output is continuing to expand, This expansion is leading to a much higher demand for steel for car manufacturing.

Kobe Steel Ltd. is Japan's number four steelmaker in the world. Kobe Steel said on Tuesday, that in joining forces with China's Anshan Iron and Steel Group, they could build a plant for high-strength automotive steel sheets in China, for the purposes of building lighter cars in China. There hasn’t been much specific detailed talk about things such as the plants location or production capacity of the facility as of yet, according to Kobe Steel, but that details are forthcoming.

One thing the two companies know for sure is that China's car production capacity is growing and in need of this joint venture for more steel production in order to keep up with the growing demand for vehicles. Car expansion in China is said to be expected to grow by 30 million automobile units by 2015, according to estimates by the country's National Development and Reform Commission. In 2010 alone, China's car output surpassed 18 million automobile units. China’s automobile industry just continues to grow, which means great expansion of companies and job opportunities for those in need.

Although nothing has been officially decided yet about the joint venture between the two steel companies, Kobe Steel has signed a letter of intent with China’s Anshan Iron and Steel Group to begin studying what would be necessary to join the two companies. Both companies understand the great automobile growth in China and that joining forces for the establishment of an automotive sheet company joint venture in China would be highly beneficial for the automotive industry.

The letter started off by saying, "The quality of vehicles being produced in China is really improving. The joint venture will enable Kobe Steel to supply its high-strength steel sheet locally to meet the growing demand for lighter vehicles in China.”