Industry News

Sutor to Produce New Hot-Dipped Galvanized Steel and to Plan New Annealing/Degreasing Production Lines

Published on 2008-03-27. Author : SpecialChem

CHANGSHU, China -- Sutor Technology Group Limited ("Sutor" or the "Company"), a leading provider of steel finishing fabrication products in China, has announced its plans to commence operation and production of its new zinc and aluminum hot-dipped galvanization ("HDG") system in the third quarter of calendar year 2008 (first quarter of the Company's 2009 fiscal year), and to initiate construction of new annealing and degreasing production lines in 2008, which are expected to become operational in the second quarter of calendar year 2009 (fourth quarter of the Company's 2009 fiscal year).

Construction of New HDG System

In August 2007, Sutor commenced construction of its new HDG system. Our construction process for the HDG system involves three stages: procurement, commissioning and final assembly/optimization. During the procurement stage, we evaluate and select appropriate component and equipment vendors; during commissioning, we conduct extensive on-site qualification testing, verification and optimization with our components, subsystems and equipment vendors and in the final stage, we complete assembly, final testing and optimization.

Currently, our new HDG system is still in the commissioning stage, which is designed to ensure the system's future stability and reliability of production, as well as efficient integration for final assembly. Our original construction design only included one galvanizing pot for the HDG specifications. However, based on the customer demand assessment and future operation cost considerations, we decided to re-design this new system within the commissioning stage to include two galvanizing pots for improved flexibility, enhanced reliability and reduced down time for cost savings. Accordingly, we extended the commissioning period for the addition of the extra galvanizing pot, which we believe will optimize our new HDG system.

Once completed, our new system is expected to provide 400,000 additional metric tons of annual capacity to our existing 200,000 metric ton HDG line, resulting in a total of 600,000 metric tons of annual capacity. Our new system affords us new advanced production capabilities using hot-dipped galvanizing methodology for both hot-rolled and cold-rolled steels, compared to our existing line, which is only capable of hot-dipped galvanizing of cold- rolled steel. Additionally, the new system can galvanize both zinc and aluminum coatings, compared to the existing line which can only galvanize zinc coating. The aluminum coatings have different applications than the zinc coatings, and can further meet the customers' specification requirements. We expect our improved production technology will make us more competitive and enhance our business prospects.

Planning of New Annealing/Degreasing Production Lines

As the new HDG system nears completion, Sutor is also planning to expand its annealing and degreasing capabilities. The annealing facilities which induce ductility, relieve internal stresses, and refine and improve the structure and the properties of the cold-rolled steel for expanded steel applications and the degreasing line which is designed as a surfacing cleaning process in preparation for annealing and for quality compliance of the cold- rolled products expand and diversify our production capacities and enhance product quality.

The new annealing and the degreasing lines are expected to have annual capacity of 300,000 metric tons each and commence mass production in the second quarter of calendar year 2009 (the fourth quarter of the Company's 2009 fiscal year).

Ms. Lifang Chen, Chairperson of Sutor, commented, "I am pleased to announce the continuation of our vertical integration growth strategy. Our new and advanced HDG system will successfully expand our production capacity helping us to better meet our customer demands. In addition, I am very excited to be commencing the construction of our new annealing/degreasing lines which will further diversify our product portfolio, expand our market applications, improve our value proposition to our customers, mitigate our supply chain and quality sourcing risks, as well as expand our revenue base for the future."

About Sutor Technology Group Limited:

Sutor is one of the leading manufacturers of steel finishing fabrication products in China. Sutor utilizes a variety of processes and technological methodologies to convert steel manufactured by third parties into steel finishing fabrication products, including hot-dipped galvanized steel, pre- painted galvanized steel, acid-pickled steel, and cold-rolled steel.

Forward-Looking Statements

This press release includes certain statements that are not descriptions of historical facts, but are forward-looking statements. Such statements include, among others, those concerning our expectations regarding our new production lines and their construction and the continued growth of the steel market, our future operating results, our expectations regarding the market for our steel finishing fabrication products, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause our actual results to differ materially from those anticipated, expressed or implied in the forward-looking statements. These risks and uncertainties include, but not limited to, the factors mentioned in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended June 30, 2007, and other risks mentioned in our other reports filed with the Securities Exchange Commission (SEC). The words "believe," "expect," "anticipate," "project," "targets," "optimistic," "intend," "aim," "will" or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The Company assumes no obligation and does not intend to update any forward-looking statements, except as required by law.

Source: Sutor Technology Group Limited

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