Consolidation Beijing’s long- term plan
Building companies based on production capacity is the main theme in China, writes Mike Hanley
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 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.
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.
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
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.