Japanese steelmaker Kobe Steel signed a memorandum of understanding with its trading affiliate Shinsho Corp., Japan companies Metal One Corp. and Osaka Seiko Ltd., and U.S.-based Republic Steel to consider establishing a joint venture in Mexico to process steel wire rod into steel wire of cold heading quality. The five companies will discuss and consider business plans for a joint venture aimed at starting operations in mid-2015.

Auto production in Mexico reached 2.93 million units in 2013 — nearly double the 1.5 million cars manufactured in 2009. One after another, Japanese auto parts manufacturers are setting up operations in Mexico, increasing demand for cold heading quality steel wire, which is used to make automotive fasteners and other cold-forged parts.

Demand in Mexico for cold heading quality steel wire has so far been met mainly by exports from the U.S. and Japan. Considering the rising demand, the five companies aim to set up a production and sales unit in Mexico that can quickly supply high-quality steel wire to their customers.