Hyundai Heavy plans to invest in 750m yuan Shougang steel plant
Executives of Shougang Concord International Enterprises say Hyundai Heavy Industries, the world's biggest shipbuilder, is in talks to invest in the mainland company's 750 million yuan (HK$844.51 million) downstream steel processing plant.
If finalised, it would mark Hyundai's second investment in a Shougang unit. The South Korean shipbuilder paid 410 million yuan to take a 20 per cent stake in the red chip's Qinhuangdao Shouqin Metal Materials in late 2006.
'We already got an indication of initial intention and it is very likely that Hyundai will buy a stake in our new plant, which will focus on developing value-added services such as steel plate coating and modularisation,' said deputy managing director Michael Chen Zhouping after the company's annual general meeting.
With a registered capital of 300 million yuan and total investment of 750 million yuan, the plant will process heavy steel plates into higher-value steel products with fatter margins. It is scheduled to start production by year-end with an initial processing capacity of 150,000 tonnes a year, increasing to 300,000 tonnes.
'Hyundai's investment in Shouqin should be very successful,' said Mr Chen. 'It not only guarantees a stable purchase of heavy plates produced by Shouqin but also brings in technology and market recognition. We hope to see more such co-operation in the future.'
The Hong Kong-listed unit of state-owned Shougang Corp, through its 76 per cent owned Shouqin and 100 per cent owned Qinhuangdao Plate Mill, produced a total of 2.072 million tonnes of heavy steel plates last year.
About half of the ouptput was destined for shipbuilders and the rest for the infrastructure and machinery industries.
'There is very strong demand in the heavy plate market due to severe shortage in China and Korea,' said managing director Cao Zhong. As a result, pricing has been 'consistently strong'.
In the first five months this year, Shougang's output of heavy plates increased 20 per cent year on year while average selling prices almost doubled, he said.
