Con­sol­i­da­tion Bei­jing’s long- term plan

Build­ing com­pa­nies based on pro­duc­tion ca­pac­ity is the main theme in China, writes Mike Hanley

The Weekend Australian - Review - - Steel -

I N late 2005 the Chi­nese gov­ern­ment’s State De­vel­op­ment and Re­form Com­mis­sion pub­lished its first state pol­icy on the iron and steel in­dus­try. At the time, the in­dus­try was plagued by is­sues — over­heated and in­ef­fi­cient in­vest­ment, frag­mented in­dus­trial struc­ture, over­con­struc­tion, poor qual­ity and en­vi­ron­men­tal pol­lu­tion.

The pol­icy aimed to in­crease the con­cen­tra­tion of steel pro­duc­tion by the large sta­te­owned steel mak­ers such as Baos­teel and to boost the in­dus­trial up­grad­ing of the steel sec­tor through new tech­nolo­gies and man­age­ment and pro­duc­tion ef­fi­ciency.

In China, as else­where, con­sol­i­da­tion is the main theme for steel. The long- term goal of the pol­icy is to pro­duce four huge pro­duc­ers of 100 mil­lion tonnes of steel a year, and six ‘‘ in­ter­me­di­ate’’ size firms mak­ing 30- 50 mil­lion tonnes a year. This is com­pared to Aus­tralia’s ag­gre­gate pro­duc­tion of 10 mil­lion tonnes.

The main play­ers in China’s steel in­dus­try are ( as listed by Me­tal­biz):

Baos­teel

BAOS­TEEL dom­i­nates the Chi­nese steel mak­ing in­dus­try, which in turn dom­i­nates the global scene. The com­pany spe­cialises in pro­duc­ing high- tech and high value- added steel prod­ucts. Mean­while, it has be­come the main steel sup­plier to the in­dus­tries of au­to­mo­bile, house­hold ap­pli­ances, oil ex­plo­ration, oil and gas trans­mis­sion, ship­build­ing, pres­sure ves­sel and con­tainer ma­te­ri­als in China. Baos­teel ex­ports to over 40 coun­tries and re­gions in­clud­ing Ja­pan, South Korea, the United States and Euro­pean Union. Baos­teel also op­er­ates in trad­ing, fi­nance, project tech­nol­ogy, in­for­ma­tion, coal chem­i­cal, steel prod­ucts deep pro­cess­ing and com­pre­hen­sive util­i­sa­tion in­dus­tries, form­ing a world­wide mar­ket­ing net­work com­posed of nearly 20 do­mes­tic and over­seas trad­ing com­pa­nies.

Ac­cord­ing to steelon­thenet. com’s An­drzej Ko­tas, Baos­teel is likely to merge with Ma­gan and with Han­dan Steel to cre­ate the world’s sec­ond- largest steel maker be­hind Arcelor Mit­tal.

An­shan Iron & Steel

ASHAN Iron & Steel Group Cor­po­ra­tion ( AISC) is a su­per- large, state- owned en­ter­prise sit­u­ated in the city of An­shan, Liaon­ing Prov­ince. Its proven iron ore re­serve is up to 9,300 mil­lion tonnes. It has six large iron ore mines, four iron ore dress­ing plants, one iron mak­ing plant, three steel mak­ing plants and 13 steel rolling plants. It also has some aux­il­iary and sup­port­ing units, such as cok­ing, re­frac­tory, ma­chin­ery, power, trans­porta­tion, civil con­struc­tion and com­pre­hen­sive util­i­sa­tion.

It is ca­pa­ble of turn­ing out each year 10 mil­lion tonnes of pig iron, 10 mil­lion tonnes of steel and 9.5 mil­lion tonnes of rolled steel prod­ucts. At present AISC is able to pro­duce more than 25,000 sizes of prod­ucts fall­ing into 700 va­ri­eties for met­al­lur­gi­cal, oil, chem­i­cal and na­tional defence in­dus­tries.

Tang­shan Iron & Steel

TANG­SHAN Iron & Steel Group ( TISCO) is in the north of He­bei Prov­ince. The head­quar­ters is lo­cated in Tang­shan City. In 2005, Tang­shan Iron & Steel merged with Xuan­hua Iron & Steel and Chengde Iron & Steel to form Tang­shan Iron & Steel Group Co. Ltd. Its rank is­sued by China’s en­ter­prises as­so­ci­a­tion re­cently was 43 among China’s Top 500 en­ter­prises, 16 in Top 500 Man­u­fac­turer and fourth in the black met­al­lur­gi­cal in­dus­try. At present, the main prod­ucts of TISOC in­clude rod, wire, sec­tion steel, hot and cold rolling strip prod­ucts, gal­va­nized plate, colour coated plate, weld­ing pipe, V2O5 and vana­dium al­loy. It cov­ers al­most the whole spec­trum of steel prod­ucts.

Ac­cord­ing to Ko­tas, in the near fu­ture TISCO will be up­grad­ing its melt shop and ex­pand­ing ca­pac­ity, while re­ori­ent­ing its fo­cus to­wards spe­cialty steels.

Taiyuan Iron & Steel

TAIYUAN Iron & Steel is a su­per- large iron and steel com­plex based in Shanxi prov­ince, and one of the largest stain­less- steel pro­duc­ers in the world. It pro­duces, among other things, stain­less steel, cold- rolled sil­i­con sheet ( coil), hot- rolled car­bon steel coil/ plate, wheel axle steel, al­loyed die steel, mil­i­tary- ori­ented steel and holds the big­gest mar­ket share re­spec­tively for stain­less steel, stain­less- steel- clad plate, elec­tro- mag­netic pure iron, wheel axle steel, checker plate and gas cylin­der steel. It stands out as the first in the trade for the com­pet­i­tive cost in pro­duc­ing sin­ter, pig iron, slab, medium- plate and hot- rolled coil/ plate.

Wuhan Iron & Steel

WUHAN Iron and Steel ( Group) Cor­po­ra­tion ( WISCO), was the first gi­ant iron and steel com­plex es­tab­lished in 1958 af­ter the found­ing of the Peo­ple’s Repub­lic of China, and one of the back­bone en­ter­prises un­der the lead­er­ship of the Cen­tral Gov­ern­ment and the State Coun­cil. The com­pany has an­nual ca­pac­ity of 20 mil­lion tonnes, the third largest in China, and the six­teenth largest steel com­pany in the world. Lo­cated in the east­ern sub­urb of Wuhan, Hubei, known as ‘‘ Thor­ough­fare to Nine Prov­inces’’, WISCO sits on the south bank of Changjiang River, cov­er­ing an area of 21.17 sq km.

WISCO owns a com­plete set of pro­cess­ing plants com­posed of min­ing, cok­ing, sin­ter­ing, iron mak­ing, steel mak­ing, rolling, and the as­so­ci­ated util­i­ties.

Ac­cord­ing to steelon­thenet. com, the like­li­est strate­gic move for Wuhan will be a merger with Panzhi­hua Steel.

Panzhi­hua Iron & Steel

PANZHIUHUA is the largest steel pro­duc­tion base in the west part of China, the largest rail­way steel pro­duc­tion base, the largest seam­less- pipe pro­duc­tion base with most va­ri­eties, the largest pro­duc­tion base for ti­ta­nium raw ma­te­rial and ti­ta­nium white pow­der, and the largest vana­dium prod­ucts pro­duc­tion en­ter­prise in China — and sec­ond in the world.

Ma­gang

IN 1993, Maan­shan Iron and Steel con­ducted a joint- stock re­struc­tur­ing and sep­a­rated into two com­pa­nies: Maan­shan Ma­gang Cor­po­ra­tion and Maan­shan Iron and Steel Com­pany Lim­ited. In 1998, Ma­gang Cor­po­ra­tion changed into Ma­gang ( Group) Hold­ings Lim­ited listed sep­a­rately in Hong Kong Stock Ex­change and Shang­hai Stock Ex­change.

The com­pany boasts cold and hot rolled sheet pro­duc­tion lines, and a high- speed wire rod pro­duc­tion line.

Jiangsu Sha­gang

THE com­pany set up through self- fi­nanc­ing in 1975 and now has the ca­pac­ity to pro­duce 9 mil­lion tonnes of steel, 13 mil­lion tonnes of iron, 350,000 tonnes of stain­less steel and 150,000 tonnes of gal­va­nized steel sheet, elec­tric fur­nace steel and spe­cial steel. Lead­ing prod­ucts range from bulk ma­te­ri­als to high­car­bon steel, fab­ri­cated metal prod­ucts with high- qual­ity wire rods, steel, stain­less- steel sheet, hot gal­va­nized sheet, tyre steel belt, cold head­ing steel, steel wire and pre­stressed sleep­ers

Ji­nan Steel

THE com­pany was es­tab­lished in 1958 and fo­cuses on medium plate, medium heavy plate, hot rolled steel sheet and cold rolled steel sheet. An­nual out­put ex­ceeds 100 mil­lion tonnes. The com­pany has en­tered the Top 50 of the best op­er­at­ing per­for­mance com­pa­nies in China Listed En­ter­prises. The com­pany has con­sec­u­tively up­dated more than 850 sets of ma­chines, form­ing mod­ern pro­duc­tion lines of medium plate, medium heavy plate, hot rolled steel sheet, cold rolled steel sheet, gal­va­nized plate and pre- painted gal­va­nized steel plate.

Laiwu Iron & Steel

THE com­pany was es­tab­lished in Jan­uary 1970 and has steel joint ven­tures and 29 sub­sidiaries with an an­nual out­put of 10 mil­lion tonnes of steel. Its main prod­ucts are H- beam, hot- rolled steel coil, heavy plate, de­formed bar, spe­cial steel and hot- rolled ribbed steel.

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