Chinese OCTG producer WSP Holdings Limited (WSP Holdings) has announced that it has established a new company through its wholly-owned subsidiary in northeast China, Wuxi Seamless Oil Pipes Company Limited (WSP China), to produce steel billet and ensure steady supplies for its growing OCTG manufacturing capacities.
According to a statement released by WSP Holdings, WSP China, together with two unrelated individuals, has established Chaoyang Seamless Oil Steel Casting Pipes Co., Ltd. (Chaoyang Seamless), a limited liability company with a registered capital of RMB 10 million ($1.46 million), located in Chaoyang, Liaoning Province for the abovementioned purposes.
WSP China holds 51 percent equity interests in Chaoyang Seamless. In the next few months, all three shareholders of Chaoyang Seamless plan to provide, based proportionately on their respective equity interests, an additional RMB 90 million ($13.16 million) in total capital contribution and RMB 60 million ($8.78 million) in total loans to Chaoyang Seamless.
Chaoyang Seamless is in the process of acquiring tangible and intangible assets from a sponge iron and steel billet company in Liaoning. The purpose of this investment is to ensure a steady supply of raw materials for WSP Holdings' growing OCTG manufacturing capacities in China, especially its OCTG production lines in northeastern China.
After the completion of the acquisition, Chaoyang Seamless will have a sponge iron production line with an annual production capacity of 50,000 mt and a steel billet production line with a planned annual production capacity of 300,000 mt.
"Our investment in Chaoyang Seamless is an integrated part of our business strategy to become a vertically integrated business, as well as to maintain and enhance our leadership position in China's OCTG industry," said Mr. Longhua Piao, chairman and CEO of WSP Holdings.
"We expect this investment will help us further stabilize the supply, quality and cost of an important raw material and provide us with a competitive advantage in the domestic and international OCTG markets," Mr. Piao added.
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