Kobe Steel Ltd. is setting up a company in China to produce aluminum panels for automotive body applications. It will be the first Japanese operation to produce such products in China, and aims for a capacity of 100,000 metric tons annually, starting production in 2016.

Tokyo-based Kobe Steel said the new company — Kobelco Automotive Aluminum Rolled Products (China) Co., Ltd. — would be a wholly owned subsidiary, capitalized at roughly ¥7.5 billion (est. $7.6 million.) 

Kobe Steel directors approved the establishment of the new company on September 30.

A plant will be built in Tianjin, at the Xiqing Economic-Technological Development Area, It will be supplied with aluminum sheet from Kobe Steel’s Moka Plant, in Japan’s Tochigi Prefecture. The unfinished coils will be annealed and surface finished before forming into automotive panels.

Kobe has developed various product design capabilities, custom aluminum alloys, and heat treatment processes for aluminum automotive sheet since since the 1980s, when it began producing such products for Japanese automakers. It now holds more than 50% of the domestic market, and it supplies automakers in Europe and the U.S., too.

Kobe Steel noted that China is the world’s largest market for automotive products, and that it is forecast to expand by 50% in the next decade. In addition, stricter fuel-efficiency standards are anticipated in order to address China’s air-quality issues. That would, presumably, further increase demand for aluminum sheet in the Chinese market.

The company already supplies Chinese automakers with lightweight aluminum suspension parts, produced by Kobe Aluminum Automotive Products (China) Ltd. A similar operation operates in the U.S., at Bowling Green, KY, and Kobe Steel has various other lightweight automotive product lines, including extrusions as well as forged, flat, fabricated, and formed parts.