MIIT to draw merger plans for steel sectors in China
Monday, 17 Aug 2009
Beijing News cited Mr Li Yizhong chief minister of Ministry of Industry and Information Technology disclosed in a press conference held by the State Council that, the industrial added value eyed a growth of 7.5%YoY in the January to July months presenting a stable developing trend.
Mr Li revealed MIIT would continue the products mix adjustment in the H2 year planning to work out industrial consolidation proposals in the days to come.
1. Unstable Industrial Rebounding Basis
Mr Li said China’s industrial economy is now showing a previously rebounding sign after taking a series of national economic policies and industrial revitalization plans.
The surveyed data shows, the nationwide scaled industrial added value was up by 7.5%YoY during January to Jul this year. In the single month the added value growth rate was posted at 3.8% in the first two months this year and up by 8.3%, 7.3% and 8.9% respectively in March, April and May even 10.7% and 10.8% in June and July.
Mr Li still believes that it’s the key moment for China economic development with the unstable rebounding basis although the economy presents a sound developing momentum at present. Products mix adjustment will still be the major work for MIIT in the H2 year.
2. Speeding up Enterprises’ M&A s in China
Mr Li thinks the overcapacities in steel industry are the original pusher behind the M&A plans. At present, the capacity of China steel industry is at 0.66 billion tonnes including 0.47 billion tonnes of real demand and 0.19 overcapacities. In the mean time, 58 million tonnes steel projects are in the construction. As a result, the best prescription is to carry out the elimination of insufficient capacities according to the 11th five year plan. He called to halt newly built steel projects in the next three years.
China steel enterprises are getting themselves more and more involved in the tide of consolidation. Mr Li views the recombination is the best way for China enterprises to wash out the outdated and insufficient capacities.
3. Review of Major M&A s Events in 2008 and 2009
1. In January 2008, Pangang Group acquired a 67% stake of Xichang Xin Steel Industry Co Ltd located in Sichuan Province.
2. In March 2008, Shandong Iron and Steel Group, comprising of Jinan Steel, Laiwu Steel and enterprises under Shandong Metallurgical Industry Co was officially registered with total capitals of CNY 10 billion.
3. In June 2008, Tangshan Steel handed with Handan Steel to establish Hebei Iron and Steel Group with 32 million tonnes capacities. Meanwhile, Baosteel, Guangzhou Steel and Shaogang co established Guangdong Iron and Steel Group with the registration capitals of CNY 35.86 billion.
4. In August 2008, PZH New Steel & Vanadium, PZH Chongqing Titanium and PZH Changcheng Special Steel announced
5. In September 2008, Liuzhou Steel joined hands with Wuhan Steel to set up Guangxi Iron and Steel Group by registration capitals of CNY 44 billion with the latter taking 80% stocks.
6. In December 2008, Tangshan Steel became the only listed company under the control of Hebei Steel Group through the combination of Handan Steel and Chengde Steel.
7. In April of 2009, Shanxi province Metallurgical industry adjustment and revitalization plan has passed deliberation and was planned to cut 150 enterprises by the end of 2011.
8. In May 2009, three steel mills in Hebei province, Tangshan Steel, Handan Steel and Chengde Xinxin Vanadium & Titanium, issued their regrouping proposals aiming to establish the second largest steel group in the province.
