Nanchang Iron and Steel plans to increase capital

Nanchang Iron and Steel plans to increase capital

Jiangxi-based Nanchang Iron and Steel Company (Nanchang Steel) disclosed on Thursday (October 13) that it plans to increase its capital by RMB 1 – 1.5 billion ($123-185 million). China's iron and steel industry is gearing up for a restructuring in light of Beijing's New Steel Industry Development Policy, slow demand and overcapacity. The enterprises' production condition, equipment, technology and regional advantages will be critical factors in how they handle the fierce competition in the market. Nanchang Steel will reportedly cooperate with domestic and overseas investors to increase its capital by RMB 1- 1.5 billion, among which RMB 1-1.2 billion will be fixed assets. After the investments, Nanchang Steel's production capacity for pig iron will be 1.95-2.3 million tons; crude steel, 2.5 million tons; and steel products, 2.4-2.5 million tons. Sales volume is expected to increase to RMB 10 billion ($1.23 billion). Nanchang Steel is one of the 500 largest industrial enterprises in China. It currently has annual production capacities of 480'000 tons of metcoke; 1.55 million tons of pig iron; 2.05 million tons of crude steel; and 2.1 million tons of steel products. Its 2004 sales volume was RMB 6.1 billion, ranking the company 52nd nationwide. The other two “iron and steel giants” in Jiangxi Province, Xinyu Iron and Steel Company and Pingxiang Steel, ranked 24th and 42nd respectively. From the ranking of Jiangxi's three “giants”, they are likely merger targets for other large-scale iron and steel groups. Nanchang will expand its production scale in the hope of playing an active role in the potential mergers and acquisitions. In fact, some other steelmakers facing similar situations are preparing to follow Nanchang's lead. While the aim of New Steel Industry Development Policy is to bring capacity under control, it has unexpectedly stimulated the expansion of capacity. SteelOrbis Shanghai