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April 11, 2011 3:07 am
SSAB plans to set up a network of service centres in Asia, as part of plans by Sweden’s biggest steelmaker to capitalise on the region’s infrastructure boom by selling more speciality materials to makers of cranes, trucks and heavy excavators.
In the next five years, the company wants to at least double its sales in Asia of what it calls “niche” products such as high-strength or tough steels used to reduce weight or add corrosion resistance. Such types of steel are used in components such as crane parts or the shovels and buckets of earthmoving equipment.
The initiative to increase revenues in Asia, particularly China and other fast-growing countries, fits into a plan by the company to push up the proportion of its total revenues that are derived from niche grades of steel to about 60 per cent by 2015, up from about 40 per cent last year.
In an interview with the Financial Times, Martin Lindqvist, SSAB’s chief executive, said: “We are aiming for a bigger footprint in Asia and to do this we have to find ways of getting closer to customers so that we can discuss with them their needs and find ways to provide them with the type of steel that meets their requirements.”
The company is exploring the idea of setting up service centres in a range of countries including China, Malaysia, Vietnam and Indonesia that would be modelled on an existing centre in Shanghai.
It could also form regional partnerships with independent steel distributors that would do a similar job of acting as a bridge between the company and steel customers in these countries, such as makers of construction machines.
Mr Lindqvist said the company particularly wanted to expand in China and form closer links with construction machinery makers such as Xuzhou Construction Machinery Group, Zoomlion and Sany to complement its good ties with big makers of earthmoving machines based in other countries, such as Caterpillar of the US and Japan’s Komatsu.
As well as making products judged to be speciality in grade since they have unusual properties and are hard to manufacture, SSAB also makes materials that are more towards the commodity end of the steel spectrum, such as hot-rolled materials used in general engineering or white goods.
Last year SSAB gained only 6 per cent of its total sales of SKr39.9bn ($6.4bn) from Asia, with about half coming from Europe and the rest mainly from North and South America.
However the share of the company’s total niche sales coming from Asia is twice as high as for revenues overall, coming in at roughly SKr2bn out of SKr16bn, or about 13 per cent.
While the company is looking to make sales of its niche steel account for as much as 60 per cent of total revenues by 2015, it wants the proportion of this coming from Asia to climb to about a fifth, implying an increase in its total niche sales in Asia of at least 100 per cent.
It is stepping up production of a special type of steel – called “quench and tempered” material, which is particularly strong and hard – from one of its plants in Mobile in the US with much of the extra output destined for China.
Global sales of speciality and high-strength steels are expected to be about 20m tonnes this year, worth about $30bn. Other big players in this industry include JFE and Nippon Steel of Japan, Luxembourg-based ArcelorMittal and Dillinger Hütte of Germany.
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