Cold-rolling plant near Istanbul to produce stainless steel from 2013
IZMIT, Turkey ― POSCO has set out to strengthen its foothold in Turkey’s growing market as it broke ground Wednesday for its new cold-rolling mill near the country’s economic and cultural capital.
Located in Izmit, a coastal industrial city about 100 kilometers east of Istanbul, the plant will be churning out 200,000 metric tons of cold-rolled stainless steel starting April 2013, POSCO said.
The world’s fourth-largest steelmaker teamed up with its trading affiliate Daewoo International Corp. and Istanbul-based Kibar Holding A.S. in January to form a joint venture with an investment of $350 million.
Through the new facilities, POSCO said it wants to preempt the lucrative stainless steel market in Turkey and nearby regions. It also launched steel-processing lines there last October.
“As a bridgehead between Asia and Europe, Turkey will help us branch out to Europe without fretting about issues involving tax and anti-dumping,” chief executive Chung Joon-yang told reporters in Istanbul.
“Stainless steel costs five times more than carbon steel. We’re striving to bring in raw materials at a lower cost to secure a competitive edge.”
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POSCO chief executive Chung Joon-yang (center), Turkish Economy Minister Zafer Caglayan (left), and Turkish Industry and Trade Minister Nihat Ergun hold hands at a groundbreaking ceremony for the steelmaker’s stainless mill on Wednesday in Izmit, Turkey. (POSCO) |
Turkey is aiming to join the European Union as early as 2013. The world’s largest economic bloc remains the single largest market for Turkish goods overall since a customs union agreement in 1996.
Demand for the corrosion-resistant material is soaring in Turkey as the country looks to transition the driving force behind its economic advancement from smokestack industries to high-tech.
Global automakers including Renault, Ford, Fiat, Nissan and Honda are beefing up operations there as well.
The EU candidate nation imports all of its stainless needs. But even in 2015, according to POSCO, supplies would still hover at around 400,000 metric tons, far short of 900,000 metric tons in demand.
“Turkey has been striving to manufacture cold-rolled coils at home, using our own resources,” Ali Kibar, chief executive of Kibar Holdings, said at a groundbreaking ceremony.
“The new plant will play a vital part in cutting imports and creating value-added products. We’re planning to ramp up its output to 600,000 metric tons depending on market conditions and our feasibility studies.”
POSCO is the world’s largest producer of stainless steel, churning out 2.9 million metric tons last year. China’s Taiyuan Iron & Steel Co. closely trails with 27.6 million tons, followed by Spain’s Acerinox S.A. with 2.06 million tons.
The envisioned facilities also reflect the firm’s efforts to increase the cold-rolling process to 80 percent of its steelmaking operations from the current 60 percent.
The mainstay of the global steel industry is shifting from hot rolling to cold, Chung noted, which gives steel high strength and tolerance and a smoother surface.
To that end, POSCO embarked this year on construction of a cold-rolled stainless steel mill in China’s Jiangsu province with an annual production capacity of 230,000 metric tons.
Last year it expanded cold-rolling facilities at its headquarters in Pohang, North Gyeongsang Province. It also took over Vietnam’s sole cold-rolled stainless maker Asia Stainless Corp. and Korea’s Taihan ST Corp. in 2009.
Chung said he is seeking opportunities in the Turkish market for its subsidiaries in charge of plant engineering, construction, energy and information technology.
On Tuesday, Chung held a meeting with Turkish President Abdullah Gul and Prime Minister Recep Tayyip Erdogan, in which the premier promised tax incentives and other benefits for the steelmaker’s business there. The two leaders clinched a deal for the Izmit plant when Erdogan visited Seoul in last November to attend the Group of 20 summit.
“I felt that Erdogan had great confidence in Turkey’s future (during the meeting),” Chung said. “I also think we should boost investment there given the country’s highest growth rate among the 20 economies despite global uncertainties.”
Turkey’s economy overall expanded 8.9 percent last year and 8.8 percent in the second quarter of this year, according to its statistics bureau.
By Shin Hyon-hee, Korea Herald correspondent
(
heeshin@heraldcorp.com)
