China Wind pulls the trigger on new production line

Wuxi, China-based China Wind Systems (OTC:CWSI) said today it is adding a new production line to its current 108,000-square-foot forged product facility (see China Wind starts production at new factory).

China Wind supplies forged rolled rings, wind tower flanges and gear rims—all components of gearboxes—to wind power and other industries in China.

The new line is expected to manufacture electro-slag re-melted (ESR) forged products, used in the wind power components market.

ESR is a process used to make a higher-quality form of steel that’s suitable for nuclear power plants and wind turbine components. The material is more fatigue resistant and doesn’t require further processing.

It’s expected to allow China Wind to charge three times the price for ESR products than its current forged products, leading to higher margins.

At full capacity, the new production line is expected to produce 6,000 tons of products that are currently priced at about RMB 30,000 ($4,400) per ton. By having a 6,000-ton capacity and a massive furnace, it would make China Wind among the few companies in China with that kind of capacity for ESR technology.

In August, the company said it was looking into pulling the trigger on the ESR production line, which would cost under $6 million to build, as it was considering going public on the Nasdaq or New York Stock Exchange Amex Equities. The funds for the new line were expected to come from internal sources and exercising in-the-money warrants (see China Wind eyes the Nasdaq with reverse stock split).

China Wind said it has ordered the initial machinery for the expansion project, which is expected to be completed by the end of the second quarter of 2010, pending financing.