Chinese steel giants forging merger - Report Chinese steel giants forging merger - Report Caixin Global reported that Chinese government’s efforts to forge stronger state owned champions appears to be proceeding undeterred by the wider economic slowdown, with China’s top steel producer looking to gobble up the country’s ninth biggest. According to insiders with knowledge of the matter, China Baowu Iron and Steel Group is in discussions for a mega merger with Magang (Group) Holding Co Ltd. The move would see Magang’s almost 20 million metric tonnes of steel production consolidated with Baowu’s existing 65 million metric tonnes and reinforce the company’s position as the world’s second biggest steel producer with steel output surpassing that of the entire US. While the company’s press officer told Caixin said there is no news to report as of yet, sources said that discussions have been going on for two months and that the deal is part of a wider effort to rid China’s bloated steel sector of money-losing companies and to foster more efficient national champions. Baowu and Magang are already collaborating together along with Anshan Iron & Steel Group and China Orient Asset Management Co Ltd as part of a 2 billion yuan (USD 290 million) joint venture to fund consolidation efforts that were announced on Sept. 18. Analysts said the merger shows that the government is pushing forward with the goal outlined in the last five-year plan to consolidate the steel industry and have 60% of the country’s capacity in the hands of its 10 largest steelmakers by the end of the decade. At present, it still has a long way to go, with the top 10 controlling just 48.8% of capacity by the end of the first half of 2018, according to data from the China Iron & Steel Association. Source : Caixin Global
Two Chinese steel firms are considering a merger, in efforts to improve efficiency in China's bloated steel industry. The addition of China Baowu Steel Group, China's ninth largest steel producer, to Magang (Group) Holding, the country's biggest, would solidify it as the second largest steel company in the world by production, behind ArcelorMittal. With the Chinese government plans to consolidate 60% of the country's steel capacity within 10 companies by 2020, the merger of two state-owned businesses would progress the industry towards the goal which remains far off, with the top 10 firms only holding 48.8% of capacity at present.