As outlined by the National Development and Reform Commission, China envisions major conglomerates each having an annual capacity of more than 30m tonnes by 2020, matching South Korea's POSCO, currently the world's fifth-largest producer.
With a capacity expected to approach 25m tonnes this year, only Baosteel currently comes close to that target. Under the plan, China's top 10 steel companies will produce 50% of the nation's steel by 2010 and 70% by 2020. Currently, China's 15 big steel companies produce about 35% of the nation's total steel.
The new policy also raised the industry's entry barriers, limiting foreign controlling stakes and allowing joint ventures and stake ownership in domestic plants to those firms meeting certain production thresholds. The restrictions forced Arcelor, the world's second-largest steel group, to reconsider its US$250m bid for Laiwu Steel, a mid-sized producer based in Shandong province. At the time of writing, the Luxembourg-based steel consortium remained undecided on whether to settle for a minority share.
With China's steel exports already racking up year-to-year gains in excess of 150% in the first two quarters, China urged its producers to diversify their overseas markets in order to avoid anti-dumping charges, citing current conditions that "have raised our concerns." China also told steelmakers to shift production toward higher added value products, of which 40% are currently imported.
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