Kawasaki Steel has forged a strategic alliance with Hyundai Hysco to supply steel sheet for Hyundai cars.

"One purpose of the alliance was to supply hot-rolled steel plates to Hyundai Hysco, while the other was to obtain a right to supply cold-rolled steel sheets for cars to Hyundai Motor," said Kawasaki Steel chairman Kenji Otomo quoted in Japanese press. Hyundai Motor has however refused to confirm the reports.

Under the agreement signed by both firms at the end of last year, the Japanese steelmaker acquired a 13 percent stake in the Hyundai Motor subsidiary. This was in return for a long-term contract to supply hot-rolled steel sheets, which expressly excluded the supply of steel to Hyundai Motor. But this latest reported agreement extends to the supply of cold-rolled sheet for cars.

AsiaOnline.com reported that Kawasaki Steel may delay the transfer of technology on the initial deal until it can persuade the Hyundai group to use its steel for cars.

Japanese steelmakers are stepping up their efforts to break into the Korean market to compensate for lower Japanese vehicle production. Nissan and Mitsubishi have both announced plans for substantial cuts in domestic capacity.

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