Steel giants still expect efficiency gains, cost savings in consolidation at home
Shanghai Baosteel Group and Shougang Group, two of the mainland's largest steel producers, are studying merger and acquisition opportunities overseas although the domestic market consolidation presents more cost savings and efficiency gains, their presidents said.
Zhu Jimin, the president of metal alloy maker Shougang, said merger and acquisition activities among international companies had become a trend and 'aroused great concern among domestic firms'.
The mergers of Luxembourg-based Arcelor and Britain's Mittal Steel as well as India's Tata Steel and Anglo-Dutch Corus had helped boost industry integration and increased supply concentration, he said on the sidelines of the National People's Congress. 'This will bring positive benefits to the industry.'
Mainland steelmakers including Shougang had entered the 'research stage' in the global mergers and acquisition game, as they sought to improve efficiency and cut costs in a sector with more than 800 players. 'Consolidation will help speed up adjustment of the unreasonable structure of China's steel industry,' Mr Zhu said.
Premier Wen Jiabao said in his government work report on Monday that the government aimed to shut 100 million tonnes of outdated iron-making capacity and 55 million tonnes of annual crude steel capacity between last year and 2010.
Of this, 30 million tonnes of iron and 35 million tonnes of steel capacity are to be closed this year.