TOKYO -- JFE Steel will begin making specialty bar steel in China, the company said Tuesday, through an investment in a unit of the country's largest steelmaker.
The Japanese steelmaker will buy a 50% stake in a wholly-owned subsidiary of SGIS Songshan for 690 million yuan ($98.2 billion). SGIS Songshan, in turn, is a unit of China Baowu Steel Group, the country's biggest steelmaker.
The Japanese company aims to complete the stake purchase by the end of the fiscal year through March, pending regulatory approval.
The specialty bar maker under SGIS Songshan can turn out 1.1 million tons of products annually. Specialty steel bars are used in auto components. JFE will become the first Japanese steelmaker to manufacture the product in China, according to a company spokesperson.
China's auto sales have fallen recently, but many of JFE's high-grade specialty steel bar products are shipped to Japanese automakers, whose sales in China have been on the rise.