China’s biggest steelmaker created two large struggling state owned steel plants

It is reported that China’s biggest steelmaker, which was created a year ago by merging two large struggling state owned steel plants, is trying to boost its total annual output capacity from the current 60 million tonnes to 100 million tonnes. According to its general manager, the ambitious plan by China Baowu Steel Group Corp, which is now ranked as the world’s second biggest steel producer next to ArcelorMittal, was announced as Beijing started to shut down many private steelmakers for environmental reasons and continued with plans to phase out obsolete facilities.

The group’s general manager Chen Derong told a steel forum in Shanghai that “In the next decade or two, China’s steel capacity may fall to 400-500 million tones. Baowu plans to raise its market share to 20 to 25%. It is an inevitable trend that China’s crude steel output will fall, but China Baowu will increase capacity. Our capacity target is set at 100 million tonnes.”

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Mr Chen said the group was negotiating possible takeovers or mergers with smaller steelmakers, mainly state-owned ones.

Analysts said that China’s drive to cut excessive industrial capacity is leading to the emergence of bigger and more powerful state players in industries like steel and coal – sometimes at the cost of private businesses.

Mr Hu Xingdou a professor from Beijing Institute of Technology said that “In many traditional industries, private businesses are further marginalised. It’s really not a good sign for China that there are more and more Chinese state businesses in the Fortune 500 list.”

China, which contributes half of the global crude steel production, booked 808 million tonnes in steel output in 2016, slightly growing from the output of 804 million tonnes in 2015, according to data by the National Bureau of Statistics.

By www.kaysuns.com