Shandong-based Jinan Iron and Steel will acquire Laiwu Steel Corp, another Shandong steel maker, in a US$1.65 billion share swap, the South China Morning Post reported. The acquisition, which will also see Jinan buy assets worth US$1.69 billion from its parent and Laiwu’s parent, was made in response to Beijing’s drive to cut steel industry overcapacity. The merger will increase Jinan’s annual capacity to 17 million metric tons, making it China’s third-largest steel maker. China’s steel making capacity is estimated to be one-third higher than can be justified by demand, but Beijing’s efforts at pushing industry consolidation have met with little success.
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