Amazing news has been heard from the ongoing 2nd standing directors' conference of
China Iron & Steel Association (CISA). Accordingly, Central
China based major steelmaker Wuhan Iron & Steel Group Corp (
WISCO) is planning to merge with Panzhihua Iron & Steel Co Ltd (Pangang), another major state-owned steelmaker in the southwest of
China. If turns out successful, this merger will be the first major cross-regional case in
China and will change the face of competition in South
China.
Currently top three steelmakers in
China; Baoshan Iron & Steel Group (
Baosteel),
WISCO and Anshan Iron & Steel Group (
Angang) have all been aiming the South
China market. The South
China market here refers to the areas in the south of Yangtze River. There are lots of steel consumers widely spread in this area, especially in Guangdong, Fujian, and Sichuan provinces. To gain more market share in South
China, these three steel magnates have taken important steps.
Baosteel targets Guangdong as the main market
Guangdong is the most developed province in
China with many industrial enterprises in various industries such as automobile, householding appliances, electronics, and telecommunications. In recent years,
Baosteel has hastened to occupy this market by setting subsidiaries and establishing good relationship with local governments.
Baosteel's subsidiaries have successfully sold a number of
Baosteel's products and set a wide client network for
Baosteel. Now,
Baosteel is planning to merge with Guangzhou Iron & Steel Enterprises Group (Guanggang) and Shaogang Iron & Steel Group (Shaogang), the only two big steel mills in Guangdong. Good news for
Baosteel; Guangdong government's approves both of these two mergers. Besides these,
Baosteel's big project; building a new mill with 10 million tons yearly output in Zhanjiang city of Guangdong, is also waiting for state's final approval. In addition to Guangdong,
Baosteel has also set subsidiaries in Fujian and Sichuan provinces.
WISCO desires to expand its orbit around Hubei province
WISCO is located in Hubei province, in the middle of
China. As the largest steelmaker in Central
China, it has a great influence on local market. But
WISCO apparently is not satisfied with its territorial advantage, and wishes to expand. Guangdong is also an important target for it. In order to supply steel products to Guangdong and surroundings,
WISCO selected Fangcheng -a port city in Guangxi province near to Guangdong- to build a new mill with 10 million tons of yearly output. Similar to
Baosteel's, this project is also waiting for state's final approval. In the meantime,
WISCO amazed the entire market by announcing its new plans to merge with Pangang.
Angang is not willing to abandon the attractive south market
Though strong rivals;
Baosteel and
WISCO, northern steelmaker
Angang does not abandon competition in south. After signing cooperation agreement with Fujian government,
Angang made a great progress on technologic cooperation and consolidation with Sangang Steel Co Ltd -a local steelmaker. Fujian is just the first step in
Angang's plans; Guangdong and other nearby areas are also its future target markets.
Yet, there are other steelmakers competing for South
China market, as well. Foreign rivals such as JFE are also in the competition. JFE co-invested with Guanggang to establish a hot-dip
galvanized mill in Nansha, in order to supply high-end steel sheet for auto body,
construction, etc. The competition will be fierce!