With India looking as a promising market for steel, Japanese steel makers are teaming up with Indian steel companies. In return for a lucrative market, Japanese steel manufacturers are willing to part with their cutting-edge technology and even capital. The latest of the breed to venture into India is Nippon Steel. Last week, Nippon entered into a technical collaboration with Tata Steel to make quality steel for the automotive industry. A couple of months back, JFE Steel Corporation had signed a technology partnership agreement with JSW Steel.
Sumitomo Metals already has a technical tie-up with Bhushan Steel for its upcoming greenfield project in Orissa. While in 2008, the Ruia-owned Essar Steel had sought technical tie-up with Kobe Steel.
Japanese firms that haven?t yet firmed up a collaboration with n Indian firm, like Japan Steel Works, is keen to have a foothold in the major emerging markets and have set up a marketing and sales office. The big attraction for global steel firms is the Indian automobile industry which is estimated to grow at 10-15% annually. Currently, of the total 4.1 million tonne (mt) cold rolled coils produced in India , half is consumed by the local automobile industry.
?India will be an attractive JV destination for Japanese companies since they have technology and financial resources and are looking for a big market, which India has,? said a metals analyst. Experts say technology patented by the Japanese is suitable for the steel produced in India, primarily annealed steel. European steel makers, they point out, often use technology more suited for galvanised steel.
The Tata Steel-Nippon JV, will set up a continuous annealing processing plant (the process of heating a metal and letting it cool slowly to harden it) and processing line with a capacity of 6 lakh tonne in Jamshedpur. The idea is to cash in on the growing demand for high grade automotive cold rolled flat products and the investment is expected to be about 35 billion yen ($388 million).
JSW Steel and JFE are also collaborating in the area of automotive steel, including production technologies and supply of substrate materials for hot rolled, cold rolled and galvanised products.
For Essar, the agreement with Kobe Steel was a means to encompass quality control and technological improvements again, the area of automotive steel. ?Such tie- ups shorten the learning curve for Indian steel companies,? an Essar Steel spokes person told FE.