Shougang Century, Cordenka mull tire reinforcement JV

Hong Kong – Shougang Century Holdings has signed a cooperation framework agreement with Hong Kong BMC (Europe I) Ltd (HK BMC) – a major shareholder of Cordenka – to explore the establishment of a joint venture focused on tire reinforcement materials.

Under the agreement, the parties preliminarily intend to establish a JV with a view to achieving “complementary strengths and a powerful synergy” in tire reinforcement materials, said Shougang Century 17 Aug.

The two companies will also jointly explore the global market for industrial rayon products.

Once established, the JV will see the parties integrating their product lines and customer resources, “further enhancing their market influence and brand presence within the global tire supply chain”.

HK BMC is a controlling shareholder of Germany-based Cordenka GmbH & Co. KG, which Shougang Century described as a “world-leading manufacturer of industrial rayon”, a high-performance tire carcass reinforcement material.

Shougang Century is a publicly listed Hong Kong-based company and is controlled by Chinese state-owned enterprise Shougang Group Co.; NV Bekaert SA and Hong Kong charity foundation Ka Shing Foundation Ltd.

According to its website, Shougang Century has an annual manufacturing capacity in excess of 300,000 tonnes of "high-quality steel cords" and is among China's top 3 tire reinforcement manufacturers.

The company operates two steel tire cord production plants in China's Zhejiang province and Shandong province.

Together, Shougang Century said, the companies are "major suppliers" of tire reinforcement materials and have “a highly overlapping customer base and strong business complementarity.”

The companies also see opportunities to strengthen their sustainability activities.

Shougang Century said it continues to increase the proportion of super tensile (ST) and ultra tensile (UT) steel cord products, while next-generation mega tensile (MT) products are being gradually introduced to the market.

The Hong Kong-based company has also already started “volume supply” of products containing over 70% recycled steel, it said.

Meanwhile, Cordenka uses wood pulp as the raw material for its industrial rayon, with a lower carbon footprint than traditional petrochemical materials.

Shougang Century said this “fully satisfies the low-carbon and circularity demands of OEMs and tire manufacturers”.

The commercial terms of the framework agreement are non-binding, except for provisions covering confidentiality, governing law, dispute resolution and legal effect.

The proposed cooperation remains subject to further negotiations and the signing of definitive agreements.