China to un­veil steel merger plans this week

The Sun (Malaysia) - - SUNBIZ -

SHANG­HAI: China is ex­pected to an­nounce plans to merge the coun­try’s top steel­mak­ers this week, ac­cord­ing to me­dia re­ports, cre­at­ing the world’s sec­ond­largest man­u­fac­turer of the com­mod­ity, as mar­kets strug­gle with a glut caused by Chi­nese over­ca­pac­ity.

State-owned Baos­teel Group, China’s sec­ond-largest steel­maker, will ab­sorb Wuhan Iron and Steel Group to cre­ate the new en­tity, the China Busi­ness News re­ported late on Mon­day.

The two firms rank fifth and 11th re­spec­tively by pro­duc­tion ca­pac­ity in the world.

The new firm will be called China Baowu Iron and Steel Group, the re­port said, adding the state as­set watch­dog has al­ready ap­proved the plan and sub­mit­ted it to the State Coun­cil – China’s cab­i­net – for fi­nal ap­proval.

China Se­cu­ri­ties Jour­nal, which is man­aged by the of­fi­cial news agency Xin­hua, said the plans could be an­nounced this week.

The com­bined pro­duc­tion ca­pac­ity of the two firms reached 60.7 mil­lion tonnes last year, data from the World Steel As­so­ci­a­tion showed, which would make the new en­tity the world’s sec­ond big­gest pro­ducer by ca­pac­ity, be­hind Arcelor­Mit­tal.

Chi­nese steel de­mand has slumped as eco­nomic growth slows and the global steel in­dus­try is as­sailed by over­ca­pac­ity. The cri­sis has seen man­u­fac­tur­ers in Asia, Europe and the US suf­fer huge losses and led to po­lit­i­cal rows and ac­cu­sa­tions of dump­ing. – AFP

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