China plans to reshape steel industry

China plans to reshape steel industry

Part of Beijing's ambitious new steel policy calls for the bulk of China’s steel production to be concentrated among a select few companies. Over the next five years, Beijing aims to have 10 of the country’s largest steelmakers account for 50 percent of China’s total steel production capacity. By 2020, Beijing hopes that these same companies will together make up 70 percent of the country’s steel making capacity. Along with the plan pushing for more consolidation, China wants to have two giant companies with 30 million tons of production each by 2010. One of these companies will probably be Baosteel, whose 21.4 million metric tons of crude steel production in 2004 make it China’s largest steelmaker and the sixth largest in the world. Another candidate is China’s second largest steelmaker, Anshan Steel. The company produced 11.3 million metric tons of crude steel in 2004, and the State Council recently approved Anshan’s merger with Benxi Steel. Anshan has also begun the construction of a new production base in Yingkou in Northeast China's Liaoning province. The deep-water port in Yingkou will help the company better facilitate its iron ore import and steel export, thus cutting transportation costs. Two other companies with an outside chance of becoming one of China’s steel production behemoths are Wuhan-based Wuhan Steel (9.3 million metric tons in 2004) and Anhui province-based Ma’anshan (8 million metric tons in 2004). Wuhan has begun to make strides in catching up with Baosteel by inking a deal in early June with South Korea’s POSCO to construct a 10 million-ton capacity green field steel plant in Guangxi Zhuang Autonomous Region. Shagang Group, Thangshan Iron and Steel, Jinan Steel, Handan Steel, Laiwu Steel and Panzhihua Iron and Steel Group (Pangang) are the other major steelmakers that will likely play important roles in reforming China’s steel industry. The crude steel production of each of these companies exceeded 6 million metric tons in 2004, and they are all listed among the world’s top 40 steel companies.