CSC to form JV with Sumitomo Metal

Taipei, May 6, 2003 (CENS)--The state-run China Steel Corp. (CSC) will soon strike a deal with Sumitomo Metal Industries Ltd. Of Japan to launch a joint-venture company in Tokyo.

CSC chairman Lin Wen-yuan is expected to leave for Japan on May 13 to sign the venture agreement with the Japanese steel firm.

Lin said his company will cooperate with Sumitomo Metal to form an NT$10 billion (US$286.53 million at US$1:NT$34.9) joint-venture company responsible for exporting semi-finished iron and steel, such as steel billets, to Taiwan. CSC will hold a 30% stake in this new company.

CSC said this would be its second cooperative venture with a well-known Japanese steel firm following a previous alliance with Maruichi Steel Tube Ltd. CSC said that the cooperation with these Japanese firms would help stabilize the domestic iron and steel market, which has been volatile over the past several months.

The cooperation with Sumitomo Metal was mapped out by former CSC chairman Y.T. Kuo. After a year of negotiations, CSC and Sumitomo have eliminated difference in export prices and entered the contract-signing stage.

Over the past year when CSC was negotiating with Sumitomo, both sides signed a one-year supply contract, under which Sumitomo supplied 600,000 metric ton of steel billets to CSC's affiliate, Yieh Loong Steel Corp. in July last year.

CSC said Sumitomo would increase the supply by 100,000 to 300,000 metric tons per year after it forms a joint-venture company with the Japanese firm.

Focusing on production of hot- and cold-rolled steel pipes, Yieh Loong uses two million to 2.4 million metric tons of steel billets per year. About 600,000 metric tons of the billets are supplied by CSC and the remainder is imported from Japan, mainland China, Russia and other countries.