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PrintJapan's Nippon Steel & Sumitomo Metal Corp said its joint venture with China's Baoshan Iron & Steel will spend 1.1 billion yuan ($180 million) to boost output of automotive steel sheet to meet growing demand in China.
The investment is the latest move in a global expansion by Nippon Steel, the world's second-biggest steel maker, aiming to increase its presence in growing markets such as China, the world's top automobile market.
The 50-50 joint venture between Nippon Steel and Baoshan, China's biggest listed steelmaker by market value, plans to build a new hot-dip galvanizing line next to existing facilities in Shanghai.
Annual production capacity of the automotive steel sheet venture will be increased by 420,000 tonnes to 2.62 million tonnes when the new line starts operating in 2015.
"We expect automobile sales will grow further in China and we want to maintain our market share of about 50 percent," Yoichi Hosoya, general manager of Nippon Steel, told a news conference on Thursday. "That's the reason why we have decided to build a new line,"
The combined share of the joint venture and Baoshan's own facilities in China's automotive steel sheet market stands at around 50 percent, he said, adding that the main customers of the joint venture are Japanese automakers.
Sales in China by Japanese carmakers tumbled after a territorial row caused an outbreak of anti-Japanese sentiment last September, but their market share has been steadily recovering this year.
Nippon Steel has been accelerating its global expansion. It began producing automotive steel pipes in Mexico in May, followed by the start of mass production of automotive steel pipes in India in June.
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