South Korean steel giant Posco said Thursday that the company completed a new high-strength steel plant in China in a preemptive measure to respond to soaring demand from the burgeoning Chinese electric vehicle market.
The new facility, located at Posco-CSPC (China Suzhou Processing Center), is a plant specialized in producing “Giga Steel,” the brand name for Posco’s advanced ultra-high tensile strength steel.
The company said the advanced high-strength steel product can withstand more than 100 kilograms of force per square millimeter.
Demand for the steel product has been increasing recently along with the market expansion of EVs that require weight reduction.
EVs are usually 25 percent heavier than conventional vehicles due to their large bettery pack that weighs between 400-450 kilograms. To reduce their weights, many EV firms are increasingly adopting light-weighted high-strength steel products, Posco explained.
“By installing new equipment for 'Giga Steel' at the China-based steel processing center, Posco will be able to increase sales of high-strength steel product. With the next generation steel product, the company will continue its expansion in the EV market,” an official from Posco said.
With the completion of the new plant, Posco aims to double the production of high-strength steel product.
Currently, sales of Giga Steel at CSPC accounts for 6 percent of the total sales of the processing center. Posco aims to increase the sales of Giga Steel to account for more than 12 percent of the center’s total sales by 2027.
Posco s said that CSPC’s proximity to EV factories in the region will help the company secure clients and save costs.
CSPC is located in Jiangsu, an eastern coastal province of China, which is close to electric vehicle manufacturing facilities owned by international EV players, such as Tesla and BYD.
CSPC is one of Posco's 12 steel processing units operating in China. The steel processing center in Jiangsu has produced a total of 897 metric tons of automotive parts since it was founded in 2003. Globally, Posco owns 26 steel processing centers
"(Posco China) will increase its efforts to keep up with the Chinese automotive market's ongoing EV transition," said Posco China CEO Song Yong-sam.