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Steel industry accelerate to mergers and acquisitions

2012,
restructuring and adjustment will become the key words of steel industry. ¡°Because
the market is not good, raw material prices always high, coupled with stringent
national control policies, for iron and steel enterprises in 2012, a
transformation must be begun.” An official of steel enterprises in Shandong told reporters.

Analysts
told reporters in 2011, China’s
crude steel output approaching 700 million tons, but the steel mills and
traders did not increase with earnings growth. In the first year of “12th five years plan”, the steel
industry is still in a difficult front line, indicating the road is still bumpy
back.

Over
the past 10 years, China’s
steel industry development has the golden years. Crude steel production has 627
million tons in 2010, representing an increase of 392.5 percent in 2000, and
the annual compound growth rate is 17%. With steel production growth spurt, the
steel industry has suffered overcapacity, low concentration, product
homogeneity, the regional distribution of unreasonable, and other environmental
issues in the throes of development.

China
Steel Association deputy party secretary Luo Bingsheng had predicted, given the
depth of macro-control to promote, market demand for steel in 2012 will fall,
the steel industry may face greater difficulties than in 2011.

Mergers
and acquisitions will be a breakthrough

Minister
of Industry Miao Wei said, 2012 will introduce the steel industry, mergers and
acquisitions and other key implementation.

Miao
Wei pointed out that in 2012, the Ministry will focus on mergers and
acquisitions as a breakthrough year focus of the work, continue to promote key
industries, trans-regional merger and reorganization of enterprises, the
introduction of iron and steel, automobiles, cement and other key industry
mergers and acquisitions to implement programs to promote improve the promotion
of corporate mergers and acquisitions policy system.

Not
long ago, the “12th five years plan” said it would focus
on support competitive large steel enterprises to develop regional,
cross-ownership mergers and acquisitions. Full play to the large steel
enterprise group’s role in promoting the formation of 3-5 furniture and has a
strong core competitiveness and international influence of the enterprise
group. Iron and steel enterprises to actively support the advantages of mergers
and acquisitions area, significantly reducing the number of iron and steel
enterprises, the promotion of regional steel enterprises to speed up industrial
upgrading, and constantly improve the level of development, the formation of
6-7 furniture with strong market competitiveness of the enterprise group.

Steel
enterprises plan to break through

Let deformed steel bar for example, the global real
estate, infrastructure industries in order to comply with environmental
protection and energy saving trend, gradually began to say no to the low-end
steel. However, China’s production of low-end deformed steel bar production
accounted for about 40%, the vast majority is more low-end steel tube, which limits the quality of steel
exports, while domestic enterprises need high-end steel
pipe
had to be imported from abroad with a high price.

Metallurgical Research Institute Li
Xinchuang considers that, as society advances, downstream users of steel
variety, quality, and service put forward higher requirements. Steel prices not
only meet the users¡¯ number, variety and quality requirements, but also to meet
their price and service requirements.

Official of steel
enterprises in Shandong
said: “As the profitability of the blast furnace can be eliminated, and
now the production line is at a loss, you must go out, mix with downstream
customers, and understand their needs in accordance with this line of thought. According
to this thought, the steel enterprise has decentralization of the downstream
sector of business customers, according to customer demand to produce steel.

    In addition, many domestic steel
enterprises in order to be able to be developed, adopted a way to build
factories abroad. Reporter has learned that at least six steel enterprises in
2011 built factories in overseas. This year the trend will not be weakened.
Chinese steel companies first began to build steel mills in overseas is
Baosteel in 2007, had plans joint venture with CVRD in Brazil, but Brazil’s demand was too high and
failed. After Wuhan Iron and Steel, Anshan Iron and Steel was also a bold
attempt, respectively, invest and build factories in Brazil
and the United States.
According to the steel industry’s “Twelfth Five-Year Plan”, the state
will encourage more steel enterprise “go oversea.”

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