Sumitomo : Expanding high-grade tool steel business in China

Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; Representative Director, President and Chief Executive Officer: Kuniharu Nakamura; hereinafter, 'Sumitomo') and Daido Steel Co., Ltd. (Head Office: Higashi-ku, Nagoya; President and CEO: Takeshi Ishiguro; hereinafter, 'Daido Steel'), have agreed to establish a joint venture in Wuxi, Jiangsu Province, for the purpose of expanding the high-grade tool steel distribution and processing business in China. The name of the new company will be Wuxi Summit Nikka Metal Products Co., Ltd. (hereinafter 'Wuxi Summit Nikka'), and it will be owned by Sumitomo and Daido Steel at an 81:19 ratio.

Tool steel is used to make dies and molds for manufacturing industrial product parts. China is currently the world's largest producer of dies and molds, and production is expected to continue growing for the coming years, increasing its national output value to 250 billion yuan (about 4.1 trillion yen) in 2020, from 200 billion yuan (about 3.3 trillion yen) in 2015. In tandem with the recent growth in die and mold production, demand for tool steel has also been rising each year, and this growth trend will continue for years to come. Greater focus on high-grade tool steels is anticipated, particularly for forging dies and die-cast mold for auto parts with high strength and heat resistance, and also for high-end molds to produce high-grade resins characterized by high luster and design performance.

Prior to the recent agreement, Sumitomo and Daido Steel have been engaged in a partnership over two decades to develop the tool steel distribution and processing business in East and South China, as part of efforts to expand sales of Daido Steel's high-grade tool steels in China. Wuxi Summit Nikka represents a new step taken under the partnership to effectively respond to a growing demand for tool steel. It is located in Wuxi, Jiangsu Province, a regional center of die and mold manufacturing, to be able to more flexibly meet ever-challenging requests from manufacturers, such as for pre-processing work and shorter delivery. The launch of commercial production and sales is scheduled for mid-2018, when construction on expanded processing capabilities and storage capacity will be completed. (Incorporation was completed in December 2016 by Sumitomo.) Functions and facilities will be enhanced with a focus on stock as well as metal cutting, milling and heat treating, to be able to undertake a broader range of processes including machining to provide ready-to-use products to customers. Expecting to meet a rising demand for high-grade tool steel in China, we will promote this project to supply Daido Steel's products in a stable and competitive manner, thereby contributing to the development of the country's die and mold industry.