International credit ratings agency Fitch Ratings has announced that it has placed the long-term rating of 'A-‘ of leading Chinese steelmaker Baosteel Group Corporation (Baosteel Group) on rating watch evolving (RWE), following this week's announced restructuring between Baosteel Group and another large Chinese steel producer Wuhan Iron and Steel Group (WISCO).
Fitch stated that the RWE reflects uncertainty over the outcome of Fitch's reassessment of the linkage between the restructured group and China's central State-owned Assets Supervision and Administration Commission (SASAC), as well as the stand-alone rating of the restructured group. However, Fitch also stated that the restructured group's business profile could strengthen, with total crude steel production exceeding 60 million mt per year, from Baosteel Group's current production of 35 million mt per year, making the restructured group the world's second-largest steel producer. The restructured group would also see an increased market share of high-value-added steel products due to its leading position in silicon steel and steel sheets used in China's auto industry.
On June 26, Baosteel Group and WISCO announced that they would undergo a joint strategic restructuring. Wholly owned by SASAC, WISCO is China's sixth-largest steel producer by output and the eleventh-largest in the world, producing close to 26 million mt of crude steel in 2015. The company is also China's leading silicon steel producer.