Shougang Century and Cordenka explore joint venture for tire reinforcement materials

Hong Kong-based Shougang Century Holdings has signed a cooperation framework agreement with Hong Kong BMC (Europe I) Ltd (HK BMC)—a major shareholder of Cordenka—to explore the establishment of a joint venture focused on tire reinforcement materials. The proposed deal aims to combine their tire reinforcement operations and expand their global industrial rayon business. Announced on August 17, the agreement outlines preliminary plans to create a JV designed to leverage “complementary strengths and powerful synergy” in tire reinforcement materials, according to Shougang Century. The two companies will also jointly explore the global market for industrial rayon products. Once established, the JV will integrate their product lines and customer resources to “further enhance their market influence and brand presence within the global tire supply chain.” HK BMC is the controlling shareholder of Germany-based Cordenka GmbH & Co. KG, which Shougang Century describes as a “world-leading manufacturer of industrial rayon,” a high-performance tire carcass reinforcement material. Shougang Century, a publicly listed company controlled by China’s state-owned Shougang Group Co., operates two steel tire cord production plants in China’s Zhejiang and Shandong provinces. The company claims an annual manufacturing capacity exceeding 300,000 tonnes of “high-quality steel cords” and ranks among China’s top three tire reinforcement manufacturers. Shougang Century and Cordenka are described as “major suppliers” of tire reinforcement materials with “a highly overlapping customer base and strong business complementarity.” The companies also see opportunities to strengthen their sustainability efforts. Shougang Century noted it is increasing the production of super tensile (ST) and ultra tensile (UT) steel cord products, while gradually introducing next-generation mega tensile (MT) products. The company has already begun “volume supply” of products containing over 70% recycled steel. Cordenka, on the other hand, uses wood pulp as the raw material for its industrial rayon, which has a lower carbon footprint than traditional petrochemical-based materials. Shougang Century stated that Cordenka’s approach “fully satisfies the low-carbon and circularity demands of OEMs and tire manufacturers.” The commercial terms of the framework agreement are non-binding, except for confidentiality, governing law, dispute resolution, and legal effect clauses. The proposed cooperation remains subject to further negotiations and the signing of definitive agreements.