Kobe Steel plans expansion in aluminium segment to cater to growing automotive demand

Kobe Steel, a Japan origin aluminium and steel product maker is expanding its capacity to supply aluminium materials to automakers in Asia and America. The company is aiming to raise aluminium and copper segment's pretax profit 70% to reach 20 billion yen ($183 million) by 2020 from the current 12 billion yen.

Demand for aluminium in the automotive sector is growing as a lighter alternative to steel in order to improve fuel efficiency and to adhere to strict carbon emission norms. The company forecasts Chinese and Japanese demand for aluminium automotive panel and sheets to rise six to seven fold by 2025 from the current level.

Kobe Steel is shifting their focus on aluminium as their mainstream businesses like iron and steel, construction machinery and electric power are making losses and the first two segments sunk the group to a pre-tax loss of 19.1 billion yen in FY2017. The company aims to rise the pre-tax profit of the the aluminium segment to at least 30 billion yen by fiscal 2025.

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Kobe is investing about 70 billion yen to strengthen its supply network for automotive aluminium in Asia. The company is planning to process semi-finished aluminium rolling sheets into panel material and other automotive products in China and Japan. The Chinese facilities achieved nameplate capacity production in May, and the company is planning the complete the expansion of the Japanese plant in Tochigi Prefecture by 2020.

The steel and aluminium maker will boost U.S. production capacity for suspensions, bumpers and other automotive aluminium parts from 2018.