OREANDA-NEWS. Kobe Steel, Ltd. announces that it will establish a company in the Xiqing Economic-Technological Development Area in Tianjin, China to produce aluminum sheet for automotive body panels. This decision was made at the board of directors meeting held earlier today.

The new company will be the first Japanese operation to produce aluminum sheet for body panels in China. Kobe Steel will supply master coils from its Moka Plant in Tochigi Prefecture, Japan. The aluminum will then undergo annealing followed by surface treatment and other finishing processes by the new company.

Kobelco Automotive Aluminum Rolled Products (China) Co., Ltd., the new company, will be established in early 2014. It will have a production capacity of 100,000 metric tons per year. The wholly owned subsidiary of Kobe Steel will be capitalized at 450 million yuan (about 7.5 billion yen). Total investment is anticipated to reach 1.15 billion yuan (about 19 billion yen). The facility is expected to start up in 2016 and will employ about 140 people when it goes into full operation.

Ever since it began supplying aluminum sheet for automotive body panels to Japanese automakers in the 1980s, Kobe Steel has built up a strong supply performance history mainly in the Japanese market. Currently, Kobe Steel has gained over 50 percent of the Japanese market for aluminum automotive body panels. In addition to developing original alloys and production technologies, which include heat treatment, Kobe Steel provides technical solutions on shape design and forming suitable for aluminum applications. Kobe Steel has received high acclaim from not only Japanese automakers, but also European and U.S. automakers.

China is the world's largest automobile market. In the next 10 years, automobile production is anticipated to increase by approximately 50 percent. Stricter fuel efficiency regulations in China aim to control the serious air pollution problem. As developing lighter automobiles is strongly required, demand for aluminum sheet is anticipated to increase tremendously in China in the coming years.

Kobe Steel currently supplies the Chinese market from its Moka Plant. However, automakers' strong requests for a local source of automotive aluminum sheet led Kobe Steel to the decision to set up a production base in China.

Kobe Steel's Aluminum & Copper Business is focusing on the automotive sector, which is increasing the use of aluminum to make lighter cars.