Baowu Group to merge Shandong Iron & Steel, aiming 150 million mt capacity

Friday, 29 January 2021 11:58:05 (GMT+3)   |   Shanghai

Shandong Province-based steelmaker Shandong Iron and Steel Group is expected to be merged into major Chinese steelmaker Baowu Group, though no official announcements have yet been made, as reported by local media.

“The acquisition of Shandong Steel is much faster than the previous merger of Ma’anshan Iron and Steel Group,” according to an insider in the market.

The crude steel output of Shandong Steel exceeds 30 million mt, indicating that the overall crude steel output of Baowu Group may reach above 130 million mt and up to 150 million mt after the merger and acquisition.

However, the industrial concentration of China’s steel industry is not high, as Baowu Group’s output only accounted for less than 15 percent of China’s overall crude steel output of 1 billion mt. As a result, market players have stated that Baowu Group’s mergers and acquisitions will not end with Shandong Iron and Steel, but may continue in the future.

During the 2016-2020 period, the industrial concentration of China’s steel industry rose from 35.9 percent in 2016 to 39.2 percent in 2020. In particular, it indicated its fastest growth since 2011 from 2019 to 2020, up by 2.6 percentage points year on year. 

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