China is the biggest steel making country, and the number of steelmakers is also the highest compared to other countries. Even the government cannot offer the accurate figure. It is generally considered that there are more than 1000 mills in
China. According to capacity, they can be classified to four grades. Although each steelmaker is different to the others, regarding the steelmakers in the same grade, their situations are partly alike.
Grade 1: Top three Baosteel, Anben Steel (Anshan & Benxi merger) and Wuhan Steel are the top three mills in
China. They have a total capacity of about 62 million tons. They own advanced technology, big scale, and full-graded steel products. Almost all high-end steel products can be offered by these three mills. Currently, they are all hastening to expand by merging with other mills. In
China, they performed well and showed their power on local market. Next goal for all of them will be performing well on the world market and becoming world-classified steelmakers. This is also
China government's requirements.
Grade 2: 10 million tons There are 10 Steelmakers in this group with capacity of 10 million tons, including Shougang, Hualin, Magang, Laigang, Hangang, Pangang, Tanggang, Jigang,
Shagang, and Baogang. Their total capacity is about 102 million tons. After several years of rebuilding, they develop fast and can produce main-stream products today. Most of them are backbone in local provinces and supported strongly by local governments. Currently, they are also expanding by combining other small mills and even consolidating with each other among themselves. They should invest more to update and gain more shares on local market.
Grade 3: 1 - 6 million tons In this grade, steelmakers are with capacity between 1 million and 6 million tons. There are about 90 mills with total capacity of 210 million tons. The situation is complicated among these mills. Generally speaking, due to huge local demand, they developed fast and accumulated large funds in the recent years. Some of them performed particularly well for their special advantages. Such as Bayi and Kungang, which are located in rural areas and own territorial privileges. Still, restricted by their scales and technology, these mills have to face huge market risks and pressures. Their common serious problem is the narrow range of products. Additionally, certain parts of these products are for low-end market. This means fierce competition with each other and even with small mills. It is difficult for them to expand under present state macro-management policies and most of them probably will be merged by big mills. To avoid it, consolidating with each other, instead of big steelmakers may be a better alternative.
Grade 4: Under 1 million tons All mills with capacity under 1 million tons are in grade 4. The total capacity of them is about 60 million tons and the number of mills is the highest among the 4 grades. Due to booming market, they gained part shares in these years. Meanwhile, they're stirrers of price competitions on low-end market in
China for their low cost advantages: manpower, low-level
iron ore, etc. But, almost all of them are facing the same destiny being washed out by market. Although some of these mills have been investing new projects to expand, at least half of these projects will have to end before completion because of their inconsistency with state's policies. Due to their low-level devices and productivity, big mills have no interests in merging them.