Millcon inks output JV with Kobe Steel
MILLCON STEEL yesterday formed a 50:50 joint venture with Japan’s Kobe Steel for the production and sale of special-grade steel, in order to capitalise on an expected surge in the automotive industry in the near future.
"Under our new milestone for this year, we are shifting our core business to special-grade steel to meet rising demand in the automotive industry. By 2020, the [Thai] auto industry expects to produce 3.3 million vehicles, a huge increase from last year’s 1.91 million. In addition, the establishment of this new JV, named Kobelco Millcon Steel, is our key cornerstone," said Sittichai Leeswadtrakul, president and chief executive officer of Millcon Steel.
Referring to a forecast by the Federation of Thai Industries, he said other Asean countries such as Indonesia and Malaysia were also expected to experience strong growth in auto production in the near future. Formed in 1905, Kobe Steel is one of the biggest steelmakers.
The Japanese steel producer also aims to capture growing demand for wire rods in Southeast Asia by enhancing the local supply chain, from wire rods to secondary processing, and supplying high-quality steel products, the CEO added.
Jiruss Rianchaiwanich, executive vice president for business development at Millcon Steel, said three key factors had helped persuade Kobe Steel to create this collaboration with his company: the Japanese steelmaker wanted to expand its production base in the region, enhance its cost management, and improve its inventory management and logistics. The JV will produce and sell wire-rod steel and special steel with a total production capacity of 480,000 tonnes per annum.
The production of special-steel wire rods is scheduled to commence in May next year, while production of ordinary-steel wire rods has in fact been up and running at Millcon Steel since last September.
The overall investment will be Bt6.79 billion, including the assets of Thai Special Steel Industry, which was acquired last year by Millcon Steel. Sittichai described the JV as a game-changer for his business, as its new partner had a strong relationship with major automotive companies.
Apart from the tie-up with Kobe Steel, Millcon Steel is also putting more emphasis on downstream steel or advanced and high value-added products, such as industrial wire, CO2 wire, bead wire, automotive fasteners, and coil springs for sofas.
