On February 7, China's Ministry of Industry, and Information Technology and three other
departments in China issued a “Guidance on Promoting the High-Quality Development of the
Iron and Steel Industry", hereinafter referred to as the Guidance. It clearly encourages leading
enterprises in the industry to implement mergers and reorganizations to build several worldclass mega steel enterprise groups. The Guidance makes concrete arrangements for steel
industry mergers and reorganizations. One to two specialized pilot enterprises will be formed
relying on the leading enterprises in stainless steel, special steel, seamless steel tubes, castings,
and other fields, respectively. The Guidance mentioned that those enterprises that have
completed the mergers and reorganizations will be given capacity replacement policy support
during their smelting project construction. The Guidance also encourages Chinese financial
institutions actively to offer integrated financial services to those steel enterprises which
implement mergers and reorganizations, layout adjustments, transformation and upgrading
based on risk-controlled, commercially sustainable principles. Li Xinchuang, Chief Engineer
of the Metallurgical Industry Planning and Research Institute, said that the concentration in the
domestic steel industry is still less than 40 percent. China’s steel industry has now ushered in
an important window of mergers and reorganizations and a period of historic opportunity.
Given the background that the output of the iron and steel industry has entered the peak
platform area, it is the key to the healthy and high-quality development of the industry to
intensify the merger and reorganization of iron and steel and improve the concentration of the
industry.
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