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Posco Acquires Cold-Rolled Steelmaker Asia Stainless

Posco has acquired the Vietnamese cold-rolled stainless steelmaker Asia Stainless Corp. (ASC) as part of its strategy to strengthen global manufacturing capacity and market presence.

Asia Stainless is Vietnam’s only cold-rolled stainless steelmaker to have maintained its operating profitability since the company’s startup in 2006. Located near Ho Chi Minh City, the company has a current annual capacity of 30,000 tonnes with plans to expand up to 85,000 tonnes per annum by 2010.

Posco expects this takeover will provide a favorable opportunity to secure the stainless steel market in Vietnam, which has a high potential for growth. Although stainless supply within Vietnam (28,000 tonnes in 2008) is lower than stainless demand (110,000 tonnes in 2008), the country continues to attract additional stainless consumers due to its comparatively lower labor rates (as compared to China).

Posco’s board approved the ASC acquisition on July 17 during a meeting held at Posco Center. On that day, the board also approved the acquisition of a 65.1% stake of Taihan ST,a producer of cold rolled stainless steel. Launched in 2007 by Taihan Electric Wire, Taihan ST Co. has signed a consignment processing contract with Posco to produce 150,000 tonnes of cold-rolled steels for electronic components. The acquisition allows Posco to increase its stake in Taihan ST Co. to 85%, building on its previous 19.9% ownership in the company.

Posco’s purchases of Asia Stainless and Taihan ST will also help the company expand its manufacturing capacity for cold-rolled stainless steel, while also developing a more profitable business structure and a higher level of flexibility that will help it respond to the increasingly changeable market.
 
In addition to the Asia Stainless and Taihan ST acquisitions, Posco’s board also approved the construction of a galvanized steel sheet plant n Maharastra State, western India. The new facility, which is to have an annual capacity of 450,000 tonnes, will help Posco initiate the supply of high-end automotive steel sheets to its customers in the region, which is emerging as a center for the automobile-related industry in India. Stimulated by the Indian government, major global auto companies are actively entering into the Indian market, with automotive production expected to skyrocket up to 4.22 million in 2015 from 1.84 million in 2008.

Posco has already purchased the site for new facility from the state government. Construction is to begin in September 2010 and be completed in May 2012.

Posco said that it plans to maximize the synergy effect between its investments in India, by connecting the on-going integrated steel mill project in the state of Orissa with the existing steel processing centers in Delhi, Pune, and Chennai.

Posco is still on track to complete construction of two overseas plants this year that will supply high-end automotive steel sheets to the North American and Southeast Asian auto markets. Mexico CGL, which has an annual capacity of 400,000 tonnes, is scheduled to start up in August, and the cold-rolled steel mill in Vietnam, which will have an annual capacity of 1.2 million tonnes, is scheduled to start up in October.