Kobe Steel, Millcon Steel to mull steel wire rod venture in Thailand

Kobe Steel, Ltd. and Thailand’s Millcon Steel Public Company Limited have agreed to commence joint consideration for establishing a joint venture to produce and sell steel wire rods in Thailand. The two companies signed a memorandum of understanding (MOU) today in Tokyo.

Last year, Millcon Steel acquired the assets of Thai Special Steel Industry Public Company Limited1 (or TSSI) and set up Millcon Special Steel Company Limited to hold the assets. Kobe Steel and Millcon Steel now intend to convert Millcon Special Steel into a joint venture by Kobe Steel’s equity participation. The two companies will begin discussions on the structure of the joint venture including the shareholding ratio, production equipment, and amount of capital investment.

Automobile production in Thailand reached 1.88 million units in 2014, according to the Federation of Thai Industries. Production is anticipated to increase to approximately 3 million units in 2020, said CSM Worldwide, an automotive market forecasting company. Other ASEAN countries such as Indonesia and Malaysia are also anticipated to experience strong growth in automobile production in the future. With wire rod demand also anticipated to increase under these conditions, Kobe Steel decided to consider establishing a joint venture in Thailand to serve as a supply base for steel wire rods.

Kobe Steel, Ltd., formed in 1905, is one of the biggest steelmakers in Japan. The company’s main businesses are iron and steel products and other businesses. Kobe Steel has been responding to growing overseas demand by setting up wire rod secondary processing bases in Thailand, China, the United States and Mexico. If the joint venture is realized, it will be Kobe Steel’s only base overseas that produces wire rods. The joint venture would also further improve the local supply system for wire rods in the Southeast Asian region. Kobe Steel aims to capture the 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.