September 08, 2008

POSCO and Nissan Motors to build steel facility in Kawasaki

It is reported that South Korean POSCO and Japanese Nissan Motor Co will build a processing plant at Kawasaki in Japan to make automotive and stainless steel. The factory, to be completed next May, will have capacity of 120,000 tones and will secure procurement of steel for Nissan Motors as its existing major suppliers Nippon Steel Corp. and JFE Holdings Inc had problems keeping up with strong demand because of growing consumption of auto grade steel in China.

The planned Japanese factory is part of a JV POS YPC established in September 2006 in which POSCO holds a 69% stake with the balance held by Nissan Trading Co, a wholly owned unit of Nissan Motors.

This would be POSCO’s 3rd facility in Japan and would use hot rolled steel from POSCO's South Korean plants. POSCO had announced in December 2006 that it would spend about USD 400 million by 2010 to increase the number of processing plants overseas to 40 from 14.

Nissan's initiative with POSCO comes as Japan's passenger car ownership rate has started to decline for the first time in more than three decades. Japanese households owned an average of 1.107 cars as of March 31st 2007 as compared with 1.112 a year earlier as per data from the Automobile Inspection & Registration Information Association. Japan is the world's third largest auto market behind the US and China.

Nissan Motors, which has a plant in Yokosuka south of Kawasaki, has been revamping its line up and introducing new models this year in a bid to stem a decline in sales in Japan. Its domestic vehicle sales, including mini cars dropped by 9% in the first seven months of 2007 to 452,027, according to the Japan Automobile Dealers Association.