During the past six months, the Chinese steel industry has experienced an acceleration in terms of merger and acquisition (M&A) activity among domestic steel enterprises. Shortly after China's State-owned Assets Supervision and Administration Commission announced the successful merger of Liaoning-based Anshan Steel and Sichuan-based Panzhihua Steel, Taiyuan Steel in Shanxi Province and Beijing-based Shougang Steel are reported to be the next in line to be merged. These two companies have complementary advantages in both raw materials and technology. If the integration of the two companies is realized, the M&A process in the steel industry in Shanxi Province will be speeded up in the short term.
On April 16 this year, the Shanxi provincial government released a scheme for the elimination of outdated capacities. Within the framework of the scheme, 126 enterprises from sectors including steel, cement, zinc smelting and electrolytic aluminum will be shut down by the end of June 2010.
The Shanxi government has also planned to step up M&A activity in the last half of this year, affecting a total of 60 million mt of steel production capacity.