News Global Market ArcelorMittal 1134 14 November 2024
Companies are joining forces to produce electrical steel in China, investing in modern technology and environmentally friendly materials
Global steelmaker ArcelorMittal and China Oriental Group have announced a joint venture to produce electric steel in China, which aims to strengthen their position in the emerging Asian market, Kallanish reports.
The two companies will each hold a 50% stake, and the deal is expected to be formalized in the first half of 2025 after receiving approval from the Chinese authorities.
The project involves an investment of $660 million to build a hot-rolled electric steel production line, which will start operating in 18 months. At the first stage, the line’s capacity will reach 2.5 million tons per year with a possible increase to 3.5 million tons. The raw materials for production will be supplied by China Oriental’s subsidiary Hebei Jinxi Steel, and support will be provided by the government of Tangshan, Qianxi province.
In addition, $2 billion is planned to be invested in the production of soft magnetic materials focused on the new energy market. For this project, the Changzhou City Government is providing support by allocating land and promoting the development of production facilities. The products of this plant will be used in the automotive industry, industrial motors, household appliances, and energy. Production is expected to start in 26 months, with an initial capacity of 1.5 million tons per year and a potential of up to 1.8 million tons in the second phase.
The company aims to capture 5% to 10% of China’s hot-rolled electric steel market, according to the Beijing Market Regulatory Administration, which emphasizes the strategic importance of this project.
As GMK Center reported earlier, in 2023, China produced 1.019 billion tons of steel, up 0.6% compared to 2022. Thus, the downward trend in the country’s steel industry has stopped after two consecutive years of declining production.
Last year, the Chinese authorities did not impose restrictions on steel production in line with their ambitions to reduce CO2 emissions, which contributed to an increase in production and revenue of local steelmakers. This year, the Chinese government plans to continue the practice of regulating steel production, but the extent and timing are not yet known.
China’s steel exports in 2023 increased by 36.2% y/y – to 90.3 million tons. Steel imports amounted to 7.64 million tons, down 27.6% y/y. Iron ore imports for the year increased by 6.6% yoy to 1.179 billion tons.
