China Plans To Forge Two Steel Giants, Squeezing Out Korea’s POSCO To 5th Place

3 August 2016

China is reviewing a plan to reorganize its steel industry into a two-man race to restructure the steel industry suffering from a glut.

According to leading foreign news outlets on August 1, a plan was under discussion to combine the Hebei Iron and Steel Group, the largest Chinese steel company in China and the Shougang Group into North China Steel. The plan also involved mixing the Bao Steel Group and the Wuhan Group into South China Steel.

It is said that if the Hebei Iron and Steel Group which ranks second in the world in terms of steel production marries the Shougang Group, the merged company will significantly narrow its gap with first-ranked Arcelor Mittal of Luxemburg. If Bao Steel merges with Wuhan Steel, the unified company will be the world’s third largest steel company after North China Steel. Nippon Steel & Smitomo Metal Corporation and POSCO will be demoted to fourth and fifth place.     

The steel industry expects that two steel giants that will be founded in China will secure volume to compete with global companies and stymie excessive steel production in China. But foreign media said that the plan to create two Chinese steel giants was neither finalized nor approved by the Chinese government.  

China’s steel production peaked but the market still has a glut of steel. Chinese steelmakers dialed up exports for the purpose of cutting down on inventories, provoking oversupply in the global steel market. In January, with an eye towards solving the steel glut problem, Chinese Prime Minister Li Keqiang resolved to slash steel production by 150 million tons by 2020. But China is failing to generate tangible results. For example, in June, China’s steel production surpassed 100 million tons for the first time in history.


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