Sumitomo, Hyosung form JVs for steelcord in Thailand, China

ERJ staff report (DS)

Tokyo -- Sumitomo Electric Industries, Ltd. has agreed with Hyosung Corporation, a Korean leading manufacturer of textile tyre cord, to jointly set up a new manufacturing company of steel tyre cords in Thailand. Sumitomo Electric will also expand its business in China by acquiring a 30 percent stake of Hyosung's Chinese subsidiary. The news was revealed in a 17 December announcement form Sumitomo.

Sumitomo Electric Group currently manufactures its steel tyre cords in Japan and Indonesia using steel rod prepared in Japan, but has been seeking ways to serve markets in Thailand and China for some time. Hyosung serves tyre industry customers in both regions and the rest of the world with tyre cord and fabric.

Sumitomo said, "These agreements with Hyosung will allow the Sumitomo Electric Group to set up comprehensive production lines, from raw materials to finished products, in both Thailand and China."

In Thailand, the new company will be located in the city of Rayong, the center of the country's automotive industry. From here, the new company will serve as a hub for both domestic and export demand. Construction will begin in January 2011, with production start-up scheduled for January 2012. THe unit will bestructured as a 70-30 JV, controlled by Sumitomo. The unit will employ 400 and has a sales volume of 3000 tonnes/month by 2014.

In China, the Sumitomo Electric Group will participate in the management of Hyosung Steel Cord (Nanjing) Co., Ltd., Hyosung's wholly owned subsidiary, by acquiring a 30 percent stake to take advantage of the growing local market. The unit will thus be a 30-70 JV controlled by Hyosung. SUmitomo expects to join the busienss in January 2011 and to generate 2000 tonnes/month of sales in 2011.

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Press release from Sumitomo Electric