SCDigest Editorial Staff
Many see the Anshan move as just the first in what will likely to be a series of investment attempts by Chinese steel makers to deflect political opposition to imports by developing US-based plants and the jobs that go with them - similar to the successful strategies of Japanese auto makers in the 1980s.
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In somewhat surprising news, among continued trade spats between the US and China over steel-related products, China's fourth or sixth largest steel company (depending on estimates) has announced plans for a joint venture that will give China its first foot hold in US steel manufacturing.
Anshan Iron and Steel Group Corp. recently announced that it has signed a memorandum of understanding (MOU) with US producer Steel Development Co mpany (SDC) to gain a stake in SDC's reinforcing steel bar plant, making it the first Chinese company to invest in a US steel mill.
SDC in turn is privately-owned start-up company led by John Correnti, a former executive at Nucor Corp.
The joint-venture's first plant will be located in Amory, Mississippi. However, the announcement says that ultimately, as many as five new steel plants will be built in the joint venture.
The deal was structured so as to meet US government requirements that steel used in infrastructure projects funded by the massive American stimulus package come from US domestic manufacturers.
The venture will enable Anshan to develop steelmaking technology using scrap steel rather than iron ore, and introduce that technology to China, the world’s biggest consumer of the metal. Vale SA, the world’s biggest iron ore supplier, this year demanded a 90 percent price increase for the material from customers, driving China and other manufacturers to look at alternative input sources.
“We will gain experience in cutting energy and natural resource consumption” by introducing the technology, Anshan Steel said. Making steel using electric arc furnaces would help in “the late stage of China’s industrialization,” it said.
Electric-arc furnaces can also cut carbon emissions and water usage in steel making dramatically.
Chinese commerce ministry spokesman Yao Jian said the government supported efforts by the country's steel companies to move into overseas markets.
"The cooperation between China and the United States in the manufacturing sector, including the steel industry, will help improve (China's) manufacturing technologies, the use of clean energy, and so on," he said at a briefing. "I think it is a good thing."
China accounts for some 47% of global steel production currently, an amazingly high percentage. Steel has been a key topic of the growing trade tensions between the US and China. Last week, The United States set combined final duties ranging up to more than 200 percent on imports of steel gratings from China, a category for which US imports totaled some $90 million in 2008 (steel gratings are bracing pieces used in industrial floors, docks, ramps, drainage covers, staircases and other applications). The charge there is that Chinese companies are selling the gratings at below market pricing due to subsidies from the Chinese government. The U.S. International Trade Commission must give final approval for the duties to remain in force. That vote is set for July.
"The United States' wrong findings and calculations on dumpings and subsidies hurt China's interests, which is unacceptable to both the Chinese government and industry," the an official Chinese government statement said last week.
(Manufacturing Article - Continued Below)