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Eiji Hayashida is the president and ceo of JFE Steel, Japan’s second-largest steelmaker by tonnage in 2009
JFE’s focus is now largely overseas and you have a number of projects planned for foreign markets. Let’s start with China. What are your plans here?
Originally, we had planned to build a blast furnace in China. But the government would not allow us to have a majority share.
There are also a lot of new projects going on in China, so I don’t think we should get into that particular market. Through the blast furnace at least — I don’t want to create excess capacity in China.
[So] our focus is mainly on automotive grades in China.
We set up a joint venture in Guangzhou six or seven years ago. Now we are producing 350,000 tpy of galvanized sheet for automotive applications.
And we have a new facility coming up next year. This will be another continuous galvanizing and cold rolling line.
This project will give us additional capacity of 400,000 tpy of coated steel and a new cold rolling mill able to process 1.8 million tpy.
It’s a big one, and we will have 50% ownership of the project.
So that the joint venture can produce automotive grades, we are going to export our hot rolled coil for the company to cold roll.
For other grades, the joint venture may buy steel in China from local producer. But the high-quality product will come from JFE.
What about outside China? The Vietnamese government recently gave JFE permission to build a blast furnace there. Is that something you plan on doing soon?
I believe there are three main countries where we can expect significant growth in Asia: Vietnam, Thailand and Indonesia.
In Indonesia, Posco has already announced a joint venture with one company to build a steelmaking plant. So that is enough.
The potential for us is in Thailand or Vietnam. But, at the moment, I really don’t think there is enough demand for steel for us to build a blast furnace yet. This will be more of a long-term project.
Vale and Dongkuk have agreed a joint venture to produce slab in Brazil. South Korea’s Posco is also interested. What is JFE’s interest in this project? We are the largest shareholder in Dongkuk, so you can view JFE’s interest as being part of Dongkuk’s.
But there are no definitive plans yet, it will probably be six or nine months before there is a final decision.
Dongkuk has three plate mills and needs around 3 million tonnes of slab each year. So a lot of the slab will go to Dongkuk.
Of course we also have a joint venture in the USA: California Steel. So Dongkuk and California Steel are the main candidates to purchase those particular slabs.
The investment you have made in India’s JSW Steel is very significant, valued at around $1 billion. What are your plans there? We have a stake of slightly less than 15% in JSW; we are going to provide the technology for automotive grades of steel so that the company can serve automotive transplants in India — Suzuki, Toyota, Nissan and so on. That’s the first step.
But demand in India is definitely going to grow.
JSW has a specific plan to build a blast furnace in West Bengal. We may join that particular plan, but the concept has yet to be finalised. We don’t know what kind of products it will make or which markets it will target.
I think our existing plan is enough to fulfil the demand for automotive grades for the next couple of years. But, in the future, demand is going to grow. In India, small cars are quite popular at the moment. The quality of steel these cars require is not that high.
But automobile manufacturers in India are eventually going to produce high-quality cars. To do that, they will need our technology.
Automotive will remain a strong place to be in the future, and we will probably focus on this sector for the next couple of years.
Of course we will increase the volume of steel we produce through new projects in India and other places.
But our target is to increase our output of quality steel rather than commodity steels, in order to increase additional corporate value.
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