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China to merge two steel makers
By Jianguo Jiang and Helen Yuan (Bloomberg)
Updated: 2005-08-16 07:15 SHANGHAI Anshan Iron & Steel Group, the
second-largest steel maker in China by output, said Monday that it would merge
with a smaller rival, the biggest move so far in the Chinese government's effort
to make its steel industry more competitive.
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| An
undated file photo shows a corner of the Anshan Iron& Steel Group in
northeastern Liaoning Province. [Net] | Anshan
Iron & Steel is combining with Benxi Iron & Steel Group, the nation's
fifth-biggest producer, to form Anben Steel Group, which will have an annual
output of almost 20 million tons. Shanghai Baosteel Group, the biggest, produced
21 million tons last year.
China, which produces one-third of the world's
steel, has been trying to curb expansion in the industry following a doubling of
output in the past four years which has driven up iron ore and coal prices to
record levels, fueling inflation.
The government plans to shut smaller
mills among the 264 steel makers and force mergers to create two companies big
enough to compete with rivals like Mittal Steel, the National Development and
Reform Commission, China's top economic planning agency, said on July
20.
"It's the biggest merger in China's steel industry so far. It
indicates the consolidation, an inevitable trend in China's steel industry, is
likely to speed up," Sun Zhanjun, an analyst at Citic Frontier China Research,
said in a phone interview from Shanghai.
The Chinese government hopes
that China's top 10 steel makers will account for half the country's output by
2010 and 70 percent by 2020. The top 15 steel makers account for 45 percent now.
Wuhan Iron & Steel, China's third-biggest steel maker, said in May that it
would acquire Liuzhou Iron & Steel, a smaller rival in the southern province
of Guangxi.
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