Speed Up Restructuring Of China'S Steel Industry

Since the beginning of this year, China's iron and steel enterprises have been reorganizing one after another, and their actions are getting bigger and bigger.

In March 26th, the Shandong iron and Steel Group Co., Ltd., which was composed of laiang and Jigang, was unveiled in Ji'nan.

In June 28th, Baosteel Group merged with Shaoguan Iron and Steel Group and Guangzhou Iron and Steel Group to set up Guangdong iron and Steel Group Co., Ltd. in Guangzhou.

In June 30th, it was jointly formed by Tangshan Iron and Steel Group and Handan Iron and Steel Group to become the largest iron and Steel Group Hebei Iron Steel Group Co in China, with capacity exceeding 30 million tons.

It is understood that more restructuring plans are in progress.

Industry analysis, this means that China's steel industry consolidation speed up again.

China's steel industry is declining in concentration.

Why should China's steel industry accelerate its restructuring?

In fact, the international iron and steel industry and iron ore industry have already set off a wave of restructuring.

In July 2006, Mittal Steel Co Nv acquired the Arcelor group to create the world's first steel company with an annual output of more than 1 million tons. In February 2007, the 54 ranked India Tata company acquired the Anglo Dutch group's conis company and became the fifth largest steel company in the world. In November 2007, BHP Billiton, the world's largest mining giant, proposed the acquisition of the global three forces to create a unique enterprise in the global natural resources industry.

Today, with the increasing concentration of the international steel industry, the industrial concentration of China's iron and steel industry has been decreasing year by year.

According to statistics, the annual output of crude steel in the 10 steel enterprises with the largest annual crude steel production accounts for 46.25% of the total gross steel in the country. In 2007, this figure dropped to 36.79%, much lower than the international average level in 2001.

The "iron and steel industry development policy" clearly pointed out that in 2010, the top 10 steel enterprises in China accounted for more than 50% of the total steel output, and reached more than 70% in 2020.

Increase the intensity of restructuring efforts

Zhang Xiaogang, President of the China Iron and Steel Association, said that China's iron and steel industry has been imminent to increase industrial concentration. In the negotiations with the international iron ore giants, the passive situation also calls for accelerating industrial concentration and enhancing the discourse power of iron and steel powers.

In recent years, the price of iron ore has risen, rising 71.5% in 2005, 19% in 2006 and 9.5% in 2007. The average increase is 85% this year.

As the largest iron ore consuming country in the world, the impact of soaring iron ore prices on our country can be imagined.

Experts believe that the rising price of iron ore is closely related to the overdispersion of iron and steel enterprises in China.

Luo Bingsheng, executive vice president of the China Iron and Steel Industry Association, told reporters: "big iron and steel enterprises buy futures prices, but many SMEs buy spot prices. They buy more and naturally futures prices are higher. How can you negotiate?"

Luo Bingsheng believes that at this stage, only by increasing the reorganization of iron and steel enterprises and forming several large iron and steel groups in the whole country can the iron ore market with serious imbalance between supply and demand be harnessing.

Moreover, large-scale restructuring is bound to eliminate some backward steel enterprises, relieve the enormous pressure of environmental protection, and also enable our steel enterprises to gain greater voice in the future international negotiations.

The trend of cross regional restructuring

Many advantages, why is restructuring slow?

Iron and steel enterprises are often local pillar enterprises, large profits and taxes. Mergers and acquisitions between them are bound to involve complex local interests. However, there are some defects in our current tax policy. If the enterprises are merged, the local finance will suffer a certain loss.

Take Anshan iron and steel and Benxi iron and steel as an example, as early as August 2005, the two enterprises were jointly reorganized into saddle iron group.

Luo Bingsheng expressed the hope that the state will introduce relevant support and encouragement policies, one is preferential policy, the other is financial and financial support.

A standard must be worked out for joint reorganization of enterprises.

Through these measures to promote the joint reorganization of China's iron and steel enterprises.

At the same time, he said optimistically that despite the obstacles to regional interests, China is still trying to speed up the inter provincial and inter regional restructuring of the steel industry.