Automakers forge long-term ties with steel mills

It is reported that Chinese auto producers have started to link up with steelmakers since the end of last year and auto producers are putting themselves back into a stable industrial chain to lower cost and boost production efficiency.

At the beginning of this Mar, BYD Co Ltd signed to strength the cooperation with Wuhan Steel in multi-fields. At the end of this February Shandong Association of Automobile Manufacturers inked a cooperation agreement with Jinan Steel. As per the agreement, over 300 auto manufactures under the association will stand in line with the mill to share benefits and risks.

In December 2008, China National Heavy Duty Truck Group Corp Ltd renewed its strategic cooperation with Baosteel to further ensure the supply of HR, CR and high strength Products. In the meantime, Dongfeng Nissan Passenger Vehicle Co upgraded its symbiosis with Baosteel.

Some analysts think these new cooperation helps to the close linking of the two industries and setting up a model for industries against the financial winter. Simply speaking, auto producers can focused on its main business, when send material processing to upstream mills. And, mills can stabilize the supply to auto companies according to agreements.