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Sutor Tech Group (SUTR) – Comments & Business Outlook
CHANGSHU, China, June 5, 2013 /PRNewswire-FirstCall/ — Sutor Technology Group Limited (the “Company” or “Sutor”) (Nasdaq:SUTR), a leading China-based manufacturer and distributor of high-end fine finished steel products and welded steel pipes used by a variety of downstream applications, today announced Ningbo Zhehua Heavy Steel Pipe Manufacturing Co., Ltd. (“Ningbo Zhehua”), a subsidiary of Sutor, had entered into a partnership agreement with Zhejiang Longkey Anti-corrosion Co., Ltd. (“Zhejiang Longkey”) to build an anti-corrosion coating line at Ningbo Zhehua’s operating base in Ningbo, Zhejiang province.
According to the agreement, Zhejiang Longkey will be responsible for procurement, construction, operating, and maintenance of the coating line and Ningbo Zhehua will provide land and factory buildings. The production facilities will be housed in the existing buildings inside the fence of its factory. As a result, capital expenditures for Ningbo Zhehua will be minimal. The new coating line will be 100% owned by Zhejiang Longkey and is expected to start operations in the first quarter of fiscal 2014.
Through this agreement, Ningbo Zhehua will have the ability to bid on additional pipe manufacturing contracts that require special anti-corrosion processing: these are bids that Ningbo Zhehua has been unable to bid for in the past. Further, Zhejiang Longkey will refer customers to Ningbo Zhehua. Once the bids are awarded, Ningbo Zhehua will manufacture the pipes and complete the anti-corrosion process by using the line operated and maintained by Zhejiang Longkey’s personnel. Zhejiang Longkey will charge an anti-corrosion fee which will be included in the selling prices of the pipes.
Mr. Yueming Shi , president of Zhejiang Longkey, said, “We are pleased to partner with Ningbo Zhehua. Its diversified product portfolio, large market share in Eastern China, and extensive expertise in the heavy steel pipe manufacturing sector are very appealing to our existing business and we look forward to exploring more opportunities in the near future.”
Ms. Lifang Chen , Chairwoman and CEO of Sutor, commented, “Sutor is delighted to cooperate with Zhejiang Longkey, a leading company in the anti-corrosion field with Class-1 Qualification for Anti-corrosion Construction. Zhejiang Longkey specializes in anti-corrosion technologies and provides solutions for a variety of construction projects and industrial applications. Its technical expertise and commitment to quality are complementary to our products and services.”
“Anti-corrosion is an important value-added process in the steel pipe manufacturing business. The partnership demonstrates our continuous efforts to improve the value of finished products and gain access to more sophisticated customers. Given the fact that Ningbo Zhehua has completed approximately 15,000 metric tons of supply contracts by using Zhejiang Longkey’s anti-corrosion service in the past several months, we are encouraged by this joint operation,” Ms. Chen concluded.
Source: http://geoinvesting.com/companies/sutr_sutor_tech_group/research/comments_business_outlook/0044801
