Steel Sector to Step up Mergers and Reorganization

China will foster a handful of internationally competitive super large steelmakers such as Baosteel, Ansteel, Wuhan Steel, Hebei Steel, Shagang and Shougang by the end of 2015 when the top ten producers are supposed to make as much as 60 percent of the country's total steel output. The main task is to curb overall production capability with focus on meeting domestic demand. The sector will be encouraged to merge with its downstream customers such as the engineering machinery and shipbuilding sectors while strengthening its partnership with overseas mineral owners in view of seizing a 40 percent equity interest in foreign iron ore assets relative to its total requirements.

Standards set to knock out obsolete steel facilities will be heightened to include every blast furnace of less than 400 cubic meters and converter below 30 tons throughout the country. The amount of standard coal used by medium- and large-sized principal steelmakers to produce one ton of steel must be limited to 580 kilograms.

China will work harder to move inland steel facilities to coastal areas or areas along the river so as to mitigate the strains on environment, transportation and water, energy consumption in big hinterland cities. All these have suggested the pace of mergers and acquisitions amongst domestic steelmakers will gain speed in the next five years.