CSC Forms A Joint Venture to Tap Mainland China Market

Taipei, April 11, 2006 (CENS)--To penetrate the high-end steel market in mainland China, China Steel Corp. (CSC), Taiwan's largest integrated producer of steel products, has jointly ventured with Chang Yi Steel Corp. and Japanese concerns including Maruichi Steel Tube Ltd., Metal One, and Toyota Trading to set up a joint venture called Maruichi Foshan Co. in Guangdong Province, mainland China, which will begin operations sometime in May.

CSC and Chang Yi combined have 50% stake in Maruichi Foshan, while Japanese concerns hold the remaining half.

CSC said the joint venture is its first action in forging global distribution channels by cooperating with downstream manufacturers. This cooperation model will be extended to central and northern China, Southeast Asia, Europe, and the U.S.

The establishment of the global distribution channel, noted CSC, will help upgrade the domestic steel industry and ratchet up the international competitiveness of domestic manufacturers.

Despite its capability to develop high-end steel products, CSC still presently lacks an integrated distribution system.

Capitalized at US$15 million, Maruichi Foshan will focus on steel shearing and the production of steel pipes to facilitate the needs of the automobile manufacturers in the southern China region. CSC is responsible for supplying steel materials to Maruichi Foshan.

Chen Kun-mu, president of CSC's trading affiliate, China Steel Global Trading Corp., said Maruichi Foshan is now installing production equipment and will begin operations in May. With Maruichi Foshan, CSC will have a distribution channel throughout the mainland, helping it to establish long-term relationsships with customers there.

CSC already has close relations with Japan's Maruichi Steel Tube. For instance, Maruichi has invested NT$1.6 billion (US$49.23 million) to acquire a 42% stake in Gains Investment Corp., a subsidiary of the CSC group.

Maruichi is one of CSC's major customers in Japan by way of cross shareholding. Currently, Maruichi holds a 1% stake in CSC and CSC has a 2% stake in Maruichi. Thanks to the close relationship, CSC can access hot-rolling steel coils at preferential prices from the Japanese partner.