Xiwang Special Steel Establish the "Bearing Steel Research and Development Centre" with the Renowned Bearing Steel Industry Standard Setting Authoritative Institution

HONG KONG, July 23, 2014 /PRNewswire/ -- Xiwang Special Steel Company Limited ("Xiwang Special Steel" or "the Group", HKEx: 01266) announced Shandong Xiwang Special Steel Company Limited ("Shandong Xiwang"), a wholly-owned subsidiary of the Group, has entered into a 5-year technical cooperation agreement with National Standards Drafting Unit of China Bearing Steel and the authority of bearing technology, Luoyang Bearing Research Centre Company Limited (the "Cooperation Partner") in respect of the establishment of the "Bearing Steel Research and Development Centre". Under the agreement, Shandong Xiwang will provide the production conditions, while the Cooperation Partner will be responsible for inspection, technical support and marketing. The Group aims at producing high-quality GCr15 bearing steel which meets the standards of Swedish SKF (Svenska Kullagerfabriken AB) and USA TMK, and the annual sales volume of GCr15 bearing steel could reach over 500,000 tonnes within five years. It is expected to form the largest high-end bearing steel production base in the north of Yangtze River region to meet the market demand for bearing steel in the near future, and increase the economic efficiency of the Group.

The robust development of the country's strategic emerging industries has urged China to become one of the largest manufacturing countries of bearings globally, which accelerated the demand for high-quality bearing steel in the use of manufacturing industries such as heavy-duty vehicles, engineering machinery, wind power and marine vessels. Furthermore, improvement on the quality of "bearings with high-quality bearing steel" has become one of the highlights under China's 12th Five-Year Plan. According to the "New Materials Industry Development in 12th Five-Year Plan" announced by the Chinese Government, the annual demand for high-quality bearing steel in China is expected to reach 1.8 million tonnes during the period, while the aggregate demand for bearing steel will reach 5 million tonnes, where Shandong Province takes account of 1 million tonnes of bearing steel consumption.

Although the annual domestic output of bearing steel ranks first in the world, the low-end bearing steel among which exceeds 90% of the total amount. The high-quality bearing steel used in heavy machinery industry such as aerospace, nuclear power, vehicles, high-speed rail, wind power, precision machine tools, metallurgical machinery mainly relies on imports.

In view of this, as early as in 2012, Shandong Xiwang has completed its special steel production capacity upgrade from ordinary steel to bearing steel, and completed an integrated and automated production line from steel smelting to continuous casting and steel rolling, which increased the annual production scale of steel product to 3 million tonnes. As the only special steel enterprise with mass production capacity of both bearing steel bar and wire rods products in Shandong Province, Shandong Xiwang is dedicated to accelerating the pace of product upgrades and seizing the high-quality bearing steel market. Through the collaboration with Luoyang Bearing Research Institute, Shandong Xiwang targets to further improve the research and development capacity as well as the current standard of techniques, facilities and inspection equipment of high-quality bearing steel, and enhance the quality and distribution channel of its special bearing steel. The Group aims to reach an annual output of 500.000 tonnes in its high-quality bearing steels production.

In the future, high-quality bearing steel will become Xiwang Special Steel's major product with quality reaching international advanced level, which results in overall profitability improvement. Looking forward, the establishment of the "Bearing Steel Research and Development Centre" will facilitate Xiwang Special Steel to become the first-class special steel enterprise in China.

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