OREANDA-NEWS.  January 24, 2012. Kobe Steel, Ltd. announces that it has established a company in Foshan, Guangdong Province, China to make steel wire for use in high-quality springs.

The new company, called Kobelco Spring Wire (Foshan) Co., Ltd. (or KSW), will begin operations in the first half of 2013. To shorten construction time and reduce investment costs and overhead, KSW will be located within the premises of sister company Kobe Wire Products (Foshan) Co., Ltd.

KSW will receive technical assistance from Shinko Wire Company, Ltd. and Suncall Corporation for the secondary processing of steel wire rod.

KSW was established in January 2012 and is capitalized at 650 million yen. It will have a production capacity of 600 metric tons per month. The company is a wholly owned subsidiary of Kobelco Holding (China) Co., Ltd., Kobe Steel's China headquarters.

In recent years, automakers in China have been rapidly increasing production. In addition, the automobile industry, along with current exhaust gas regulations, is being pressed to reduce carbon-dioxide emissions. In the future, automakers will be required to make smaller and lighter cars, while improving engine combustion efficiency.

On this background, in China the world's major spring manufacturers have been actively adding new production lines and increasing capacity to make engine valve springs and other high-quality springs. Kobe Steel anticipates that demand for high-grade steel wire for springs made from its wire rod - highly evaluated by automakers in Japan, the United States, and Europe - will increasingly grow.

When KSW begins operating, plans call for steel wire, which is exported, to shift to local production to meet market demand for automotive springs in China. Through the establishment of KSW, Kobe Steel aims to meet the growing demand for high-quality steel wire in China. It plans to build a local supply network that can meet the market in terms of quality, competitiveness and flexibility.