Kobe Steel to make rods for autoparts at Thailand plant

2 February 2016

Kobe Steel is proceeding with its plan to manufacture steel rods for automotive parts in Thailand starting in spring 2017. This will be the first time since the 1990s that a Japanese steelmaker has used an overseas base to manufacture this product.

The steel rods are made from a molten mix of iron and alloy metals that is hardened and then pulled under strict temperature control in a technically demanding procedure. Secondary processors use these rods to make steel cables of varying sizes, which autoparts makers use to manufacture engine components and bolts.

Kobe Steel supplies these rods to affiliated secondary processors in Thailand, but shipments from Japan can take more than three weeks. Making the steel rods locally can shorten delivery time to as little as one day.

Building on a memorandum of understanding inked in June, the Japanese steelmaker will sign an official agreement with Thailand's Millcon Steel as soon as this month to create a local joint venture with the capacity to make 500,000 tons of steel rods a year.

Production will start in spring 2017, and the bulk of the output will be supplied to Kobe Steel's affiliated secondary processors in Thailand. The work will take place at a factory in Rayong Province of a Millcon Steel subsidiary in which Kobe Steel will acquire a 50% stake.