Kobe Steel takes control of China compressor arm to meet growing demand for oil, gas plants

05, Jun. 2020

Non-standard screw compressor made by Wuxi Compressor (Photo courtesy of Kobe Steel)
Non-standard screw compressor made by Wuxi Compressor (Photo courtesy of Kobe Steel)

TOKYO, NNA – Kobe Steel Ltd. has turned its specialty compressor manufacturing affiliate in China into a subsidiary through an additional share purchase, aiming to cash in on growing equipment demand for oil, gas and chemical plants.

The major Japanese steelmaker said Wednesday it has raised its stake in Wuxi Compressor Co., the joint venture with Wuxi Victor Group Co., a local compressor maker based in Wuxi, Jiangsu Province, from 44.3 percent to 70 percent.

Kobe Steel, headquartered in the western Japanese port city of Kobe, is poised to increase its capacity to produce non-conventional compressors in China, according to a spokeswoman.

“We’ve decided to boost our production capacity in the country due to brisk demand as a slew of oil refinery projects come out,” she told NNA on Thursday, but declined to comment on further details of the capacity expansion plan.

Non-standard compressors are used as core parts for refineries, chemical and natural gas plants among other production facilities. Wuxi Compressor produces three types of non-standard compressors -- screw, reciprocating and centrifugal compressors.

Kobe Steel has the world's largest market share for non-standard screw compressors, it said in a statement.

In 2011, Kobe Steel acquired a 44.3 percent stake in Wuxi Compressor from the partner to capitalize on growing demand in the local market. It has recently bought an additional 25.7 percent stake in the Chinese joint venture.

Kobe Steel has manufacturing hubs for non-standard compressors in Japan and the United States, and sales and after-sales service units in Germany, the United Arab Emirates, Brazil, the Philippines and Singapore.

By taking control of the Chinese manufacturing unit and strengthening its group operations with these bases, Kobe Steel “aims to build an optimum manufacturing and sales structure to further expand its business,” it said in the statement.

Wuxi Compressor, founded in 1955 as a state-run company and incorporated in 1992 as a joint stock company, is capitalized at 150 million yuan ($21 million) and employed 477 workers as of the end of 2019. It posted 642 million yuan in sales in 2019.