Posco starts building first galvanizing line in Southeast Asia

South Korean steelmaker Posco has recently started to build a continuous galvanizing line in Thailand in an attempt to expand its global automotive steel production base.

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With capacity of 450,000 tpy, the line will be Posco’s first hot dipped galvanized steel sheet plant in the Southeast Asia region, the company said in a statement, written in English, posted on its website on Monday October 27.

The mill is expected to become operational by June 2016 in the city of Amata in Rayong province, 130km southeast of Bangkok. It was announced early last year, but at an originally smaller capacity of 400,000 tpy.

“Thailand is rising as the biggest automotive production base in Southeast Asia, with an annual production capacity that has increased to 3.2 million vehicles in the wake of facility addition and expansion by automakers in the past three years,” Posco said on Monday.

The decision sees the South Korean steelmaker follow similar moves taken by its two biggest competitors in Southeast Asia – Japanese mills JFE Steel and Nippon Steel & Sumitomo Metals (NSSMC). 

JFE put into operation a 400,000-tpy continuous galvanizing line (CGL) in April last year in Rayong province, and this was followed a few months later by NSSMC’s 360,000-tpy line.

“Judging that there would be consequent challenges to continuing to export automotive steel sheets to Thailand, Posco decided to build a CGL on site in Thailand in a bid to make a greater dent in the automotive steel sheet market in Southeast Asia, including Thailand,” the South Korean company explained.

“Thailand is one of the top ten countries in terms of automobile production capacity, and leading Japanese, US and European automakers that have maintained a strategic partnership with Posco for several years operate actively in the country,” it added.

The galvanizing line will supply both galvanized and galvannealed steel to carmakers and automotive suppliers in Thailand.

Posco will look to “fortify pre-marketing activities” in order to reach a break-even point within a year of the mill being completed, it added.

Once the mill starts operation, Posco’s overseas automotive steel sheet production capacity will increase to 2.2 million tpy.

The company currently has four continuous galvanizing lines outside South Korea – two in Mexico with a combined capacity of 900,000 tpy, and lines in China and India each with capacity to produce 450,000 tpy.