In the year 2021, the start of the 14th Five-Year Plan period, the CPC Hunan Provincial Committee initiated and implemented the strategy of “Constructing Three Hubs and Making Four-pronged Achievements” as the guiding principle and guidance for action for the development of Hunan during the 14th Five-Year Plan period and even longer. Crowned as “the Pearl in Central Hunan Province”, Loudi takes the steel and equipment manufacturing industries as the key driver to thoroughly implement the provincial development strategy.
Industrial development must keep pace with the times. Advancing in four directions (electric vehicles, smart vehicles, connected vehicles and shared vehicles), the automotive industry is ushering in a new round of development. Traditional automakers such as GAC, BAIC and BYD are forerunners in developing NEVs while new auto-making forces are also rising, such as NIO, Lixiang and Xiaopeng. In this context, as an important player in the auto supply chain, Valin ArcelorMittal Automotive Steel Co., Ltd (VAMA) is also faced with new opportunities and challenges.
Transnational Partnership: Introduction of AS-coated Hot-stamping Steel Technology into China
In recent years, PHS and HSS products have become new weighting factors in the automotive market competition.
As described for car body safety of Haval H6, won its 8th SUV annual sales champion and the 93rd SUV monthly sales champion in March, 2020, it boasts “top-level passive safety” equipped with PHS up to 2,000 MPa, one-piece PHS door ring plus 71.61% HSS body. VOYAH, a high-end smart electric vehicle brand of Dongfeng Motor Corporation, launched its first car model FREE, which highlights its front and rear door beam with 2,000 MPa AS-coated PHS, making it the first of its kind in the industry, and a “BIW with up to 31% PHS of 1,500 MPa and above” …
Whoever has PHS of higher strength and higher proportion will produce cars of higher safety.
This can be explained by a set of data here. The tensile strength of ordinary high strength steel is about 400 to 450 MPa, while that of PHS is around 1500MPa, which is 3 to 4 times that of ordinary steel. The conflict between strength and ductility of high strength steel is successfully solved by the forming and strengthening steps of the hot-stamping steel technology. However, after heating and stamping under more than 900 ℃, the steel plate becomes very susceptible to surface oxidization, causing great impact on welding, coating and other processes, and posing great difficulty in the subsequent treatment.
Developing technological solutions to this problem cost great time and efforts. It was not until 1999 that the AS-coated PHS product Usibor®1500 was invented by ArcelorMittal’s Research Center for Hot Rolled Products in Fos-sur-Mer, France. The AS-coated hot-stamping technology can not only effectively prevent the formation of oxide skin, but also absorb impact energy produced by collisions. This technological innovation from “0” to “1” not only ensures the strength and resilience of the vehicle, but also provides an optimal solution to lightweight design and safety performance of the vehicle.
In 2006, the Mittal Group and Arcelor Steel Group merged into ArcelorMittal Group (hereinafter referred to as ArcelorMittal). Cooperation of the two global steel giants makes ArcelorMittal a forerunner of the industry by virtue of its technological advantages and large scale. New high-strength steel products such as AS-coated PHS are widely used in many models of Volkswagen, Ford, GM, Honda, Nissan, Fiat Chrysler and other auto makers, leading the market as a representative configuration for safety performance.
At that time, China, with an emerging automotive market driven by a full consumption momentum, saw rapid growth in automotive production and sales, and was ready to experience a shift from a big manufacturing country into a manufacturing power house.
Right then, an offer was made to ArcelorMittal by Valin Steel, a large enterprise group jointly established by three major iron and steel enterprises in Hunan Province – XISC, LY Steel and HYST at the end of 1997, which ranks top ten among iron and steel mills in China. As the world’s leading automotive steel supplier, ArcelorMittal again joined the partnership, continuously producing new high-strength steel products to drive the development of the global automotive industry.
On both sides of the partnership, one provides huge market potential of the world’s largest car manufacturing power and the other provides sources of world-leading technologies and raw materials. In 2009, Valin ArcelorMittal automotive steel project gained official approval, marking the commencement of a transnational partnership.
VAMA Phase II：Expanding the Production Capacity of Hot-stamping Steel, and Breaking through the Bottleneck of Cold Stamping Steel in Strength
In 2010, Valin ArcelorMittal Automotive Steel Co., Ltd (VAMA), a joint venture between ArcelorMittal and Valin LY Steel, was established. With a strong parent company, VAMA is born with a mission to bring world-leading automotive steel solutions to China.
Since SOP in 2014, VAMA, as a high-end automotive steel manufacturer focusing on technological innovation, has developed from a single product to a full range of automotive steel grades, including advanced high-strength steel (AHSS) and ultra-high strength steel (UHSS) as well as competitive products such as Usibor®1500, Usibor®2000, and Ductibor®1000 to meet the varied needs of domestic OEMs.
On February 1, in the spring of 2021 in Loudi, VAMA Phase II project officially kicked off. Leaders of CPC Hunan Provincial Committee and the Provincial Government, CPC Loudi Municipal Committee and the Municipal Government, representatives of both shareholders of VAMA and senior executives of VAMA jointly witnessed the official commencement of the Phase II project. VAMA Phase II project aims at the world's cutting-edge technology of high-strength and light-weighted automotive sheet, to build a new continuous galvanizing line with 450kt capacity per annum, which is a major industrial project to develop "three hubs". Hunan CPC Committee and Hunan provincial government attach significant importance to the project, Loudi CPC Committee and Loudi municipal government strongly support it, and both shareholders actively advance it. Today, the project kicks off construction as planned, which is just in time. Mr. Cao Zhiqiang, Chairman and party secretary of Valin Steel, expressed at the groundbreaking ceremony.
The total investment of Phase II project is said to be more than 1 billion yuan, with such main products as the 3rd generation galvanized high strength steel, AS-coated PHS, and Zn-Al-Mg coated products. After SOP, the annual production capacity of PLTCM will be increased from 1.5 to 2 million tons, and the production capacity of CGL and CAL from 1.15 to 1.6 million tons. After the launch of Phase II products, the product structure will be further optimized.
According to relevant statistics, the annual demand for hot-stamping steel is about 4 million tons globally, and 1.2 million tons domestically. As more and more OEMs are incorporating hot stamping steel to safety parts and safety structural parts, the demand for hot stamping steel in the domestic market is still growing. In order to better satisfy and cater to customer needs, the production capacity of hot stamping steel will be further expanded in VAMA Phase II.
From “0” to “1”, it requires innovation, and so does it from “1” to “N”. During the localization of AS-coated hot-stamping steel, VAMA also sets its eyes on cold-stamping steels, which is experiencing a recovery in the automotive industry. Cold stamping steels do not require large amounts of energy for heating during stamping and can provide the strongest protection at the lowest weight. However, cold-stamping steels have long faced a bottleneck in strength, that is, their formability becomes less desirable over 1, 000 MPa. Through technical efforts of the VAMA team for many years, VAMA Phase II launched a new product: 3rd generation cold stamping steel Fortiform®?, which has both good formability and high strength.
Meanwhile, the launch of Zn-Mg alloy-coated products brings more choices for the design of lightweight car body. “After comprehensive consideration of cost, anti-corrosion and formability etc., we see that Zn-Mg alloy coated products can further meet our demands for UHSS and exposed parts.” said a leading auto maker, who is currently negotiating relevant cooperation, further demonstrates the innovative strength of VAMA.
Strong support from the parent company empowers VAMA’s accelerated localization of world-leading automotive steel, and moreover, strengthens its confidence in innovation. ArcelorMittal has 11 R&D centers and more than 1,300 professional R&D personnel across the globe. Every year, ArcelorMittal invests large amounts of money in the research and development of automotive steel, creating numerous “world’s only new products”. In addition to providing steel to VAMA as upstream supplier, Valin Group has also provided great support in VAMA’s localization process.
Recently, ArcelorMittal and Valin Group have planned to sign an Agreement on Deepening Cooperation in the presence of the State-owned Assets Supervision and Administration Commission of Hunan Province. The parties are committed to providing critical support for the sustainable development of automotive steel and developing VAMA into a leading supplier in the domestic automotive steel market.
New Energy Era: Upgrading Products and Solutions, and Developing New Customer Strategies
In 2014, the first domestic small-angle crash test was publicly performed in China Automotive Technology and Research Center (CATARC).
In this test, two cars, including the Honda Acura MDX, had their front door rings hit by external force, and produced very significant contrast. The one without hot stamping steel door ring design was deformed so badly that the cab door could no longer be opened, while the Honda Acura MDX’s door area remained largely intact after the collision with a “safe space” formed at the cab, so that the driver could easily open the door.
The front door ring is a critical position for the survival of front passenger, thus called the “life ring”. In 2014, Honda Acura MDX adopted VAMA’s one-piece PHS door ring solution, attracting great attention of the industry and winning global design award. Unlike the design of typical A and B-pillars consisting of 3 to 7 parts, VAMA uses the latest manufacturing technology to produce cold and hot stamping steel, which are welded together through laser welding technology before being stamped into a single piece. In 2020, VAMA’s one-piece PHS door ring was applied for the first time to the 3rd generation Haval H6 of domestic brand Great Wall Motors. At present, the design has achieved reasonable weight reduction and created safer cars that are already running along streets in China.
As history rolls on, the wheels of industry development never stop turning.
From the national policy of “energy conservation, emission reduction, and low carbon economy” imitated in 2019 to the official release of the New Energy Vehicle Industry Development Plan (2021-2035) by the General Office of the State Council in November 2020, lightweight, energy conservation and emission reduction of automotive steel have become a future trend. According to estimate by experts, with the upgrading of consumer market and demands, China’s auto market will maintain at least an annual growth rate of 6% in the next ten years, and the car body will be upgraded with the 3rd generation AHSS and 2nd generation PHS.
For enterprises, only by focusing on new technological breakthroughs can they keep up with the pace of the times and truly realize sustainable development. Closely following industry trends, VAMA adjusts product processes and design accordingly to support its customers throughout the vehicle life cycle and help them meet the challenges of the market. In addition to the innovative one-piece PHS door ring solution, VAMA has also introduced an innovative product, the super exposed part, which can greatly improves the painting appearance performance.
It is worth noting that VAMA has been committed to localizing new products and solutions. With the help of the expert team under the early vendor involvement (EVI) service mechanism of ArcelorMittal and VAMA’s Technical Support Team, VAMA will provide auto makers with customized services and integrate its steel solutions into their vehicles.
Specifically, one and a half to two years before production, VAMA engineers will begin working with automakers to design the most advanced and up-to-date steel grade for their new models, and ensure that the new model meets the challenging emission standards in accordance with policy for mass production.
After the NEV trend, all-electric mileage and the proportion of 2,000 MPa coated steel have become highlights in advertising the launched new models. If mileage is related to cost, power consumption, charging speed etc., then the strength and proportion of hot-stamping steel can effectively improve passive safety of the car body.
Presently, VAMA is engaged in cooperation with a number of NEV makers, the role of advanced high strength steel (AHSS) and laser welding technology is again given full play in body weight reduction, and crash safety performance. The application of the innovative S-In Motion® NEV solutions that can accelerate the upgrading of the NEV manufacturing sector has also become a focus of Phase II project.
“The new auto-making forces have a highly innovative spirit and they tend to think outside the box, which will be more interested to the application of the 3rd generation high strength steel,” Fernando said. Though the new auto-making forces have very limited sales, they are developing very fast. He believes that the NEV era will come sooner than expected. For this reason, VAMA’s customer strategies are also upgraded accordingly. In addition to adjustment to steel grades and solutions, in the future, 50% automotive steel sales of VAMA will serve NEVs.
Innovation means not only closely following market trend and providing customers with new steel products and new technical solutions, but also opening the door for innovative talents.
“The key to innovation is to encourage the team to always be innovative and always try to think outside the box.” Fernando continued that bringing in innovative talents will help VAMA better localize its technologies and develop products based on carbon neutral and peak carbon emission goals. In his opinion, this is the key to achieving phased goals as the era of intelligent manufacturing 4.0 approaches, and an important factor for enterprises to remain competitive in the market.
The Key to Reconstructing the Automotive Industry Chain is the Coordinated Development of Enterprises
At present, the global automotive industry has shifted from traditional R&D competition to competition in the ecosystem. Effective operation of the industrial chain is a prerequisite for profit, as well as a precondition for participants in all links of the industrial chain to obtain benefits. As the automotive industry advances in four directions (electric vehicles, smart vehicles, connected vehicles and shared vehicles), the key to sustainable development of a company is the collaboration and sharing with partners at different levels and in different ways while continuously building up strength and core competitiveness.
In cooperation with upstream steelmakers, VAMA gives them suggestions on product R&D and upgrading closely centering on market demands so as to help them meet higher quality requirements of better automotive steel. VAMA works closely with Valin Group’s subsidiary LY Steel, by consuming the locally supplied hot-rolled substrates and providing suggestions on product upgrading for LY Steel with the technical support of ArcelorMittal.
As an upstream supplier of automakers, VAMA has established cooperative relationships with mainstream joint ventures and domestic brands across the country, and has been in close cooperation with renowned domestic and overseas brands such as Haval, Volkswagen, Mercedes-Benz, Nissan, Toyota, Honda, GM, Volvo, Ford and Hongqi. "VAMA’s competitive AS-coated hot stamping steel has been widely used in various models of FAW-Volkswagen. The stable quality, and significantly shortened transportation time due to local production have guaranteed efficient production for us," said Gao Yang from the planning department of FAW-Volkswagen, one of the strategic partners of VAMA. Speaking highly of the cooperation with VAMA, Gao also expressed, "I hope VAMA can realize early mass production of steel for exposed parts and make more contributions to localization."
Regarding the development of supply chain, VAMA and Gonvarri, a world-leading advanced automotive steel processing solutions provider, established GONVVAMA, a supporting enterprise in the extended downstream industry chains, in 2016. GONVVAMA has set up four processing service sites in Shenyang, Chongqing, Loudi and Changshu to provide customers with customized advanced high-strength steel, and the blanking and laser welding services for exposed parts.
As a leader in the industry, VAMA has been promoting the establishment of a standardized system for automotive steel production and independent intellectual property rights. By October 2020, VAMA had established 13 industry product standards, obtained more than 30 utility model patents, and developed more than 80 new products including those filling the gap in China's domestic high-end automotive steel market. It is fair to say that VAMA has played an exemplary role in promoting energy conservation and emission reduction in the automotive industry, resource conservation and comprehensive utilization in the whole community, as well as adjustments to automotive steel structure.
VAMA has made progress by leaps and bounds in the past 11 years from the establishment of the team in 2010 to VAMA CEO Fernando’s introduction of WCM, an advanced management concept, to help determine the team's vision, that is, to become the number 1 steel solutions provider in China. Thanks to patent authorization and technical support from ArcelorMittal, VAMA has filled the gaps in China's high-end automotive steel market and promoted the replacement of imported products. Nowadays, VAMA has become not only an indispensable player in the automotive supply chain, but also an important builder of the automotive ecosystem.
Looking ahead, "VAMA strives to be among the top three in the industry in terms of comprehensive strength (products, scale and size) within 5 years, and the first in terms of technology and innovation." These are the goals of phased development established by VAMA in the context of the national "14th Five-Year Plan" and the provincial strategy of “Constructing Three Hubs and Making Four-pronged Achievements”.
The future is already here. As the journey of localizing the world's leading automotive steel goes on, VAMA, the ecosystem builder, will keep marching along the innovative development path.