Metal Products News
- China Exclusive: China's steel industry undergoes key changes
Date: 3-Jan-2007 Sources: (People's Daily)
The year 2006 has witnessed major changes in China's iron and steel industry, in areas such as the national distribution of plants, the regrouping of companies, the upgrading of products and the ownership of enterprises, observers have said.
Moving to port cities
'China's iron and steel companies are moving to port cities and places with raw materials, which is the most outstanding change in the industry distribution,' said Liu Rujun, vice chairman of the China Iron and Steel Association.
Shougang Group, a steel giant based in Chinese capital Beijing, will complete its massive relocation to Tangshan, Hebei Province by the end of 2010, which the company said would benefit its development.
The benefits are obvious. Shougang Group officials said their transportation cost would be greatly reduced and supply of raw material guaranteed because of Caofeidian port and abundance of iron ore in Tangshan.
Shougang is not the only steel company in China to seek its own port in coastal cities.
Shanghai Baoshan Iron and Steel Corp. (Baosteel) has built a new steel factory in the southern city of Zhanjiang. Wuhan Iron and Steel Corp has built a modern iron and steel works in Fangchenggang, also in south China. Angang Steel Co. has started its new plants in Yingkou in northeast China.
Baosteel officials attributes the moves of Chinese steel companies to port cities to China's growing dependence of ore imports.
Regrouping of companies
In order to improve status on the international arena, China's steel companies not only resorted to relocation, but also to consolidations as well as merge-and-acquisition campaign.
Tangshan Iron and Steel Company, located in the northern Hebei Province,has taken over two local steel mills, the Xuanhua Steel and Chengde Steel, and thus risen to be China's second largest steel maker next only to Shanghai-based Baosteel.
The new company has also teamed up with the Shougang Group in Beijing in building a new steel production base in Caofeidian in Hebei Province with an annual output capacity of 15 million tons.
Anshan Iron & Steel Group in northeast China's Liaoning Province, also regrouped with Benxi Iron & Steel Company, a local steel company in Liaoning's Benxi City in 2004.
Upgrading products
China's steel industry also tries to optimize the products structure as a way out in the fierce global competition by shutting down small and outdated plants and encouraging innovation.
North China's Hebei Province will close 26 small and outdated steel production units by the end of 2007 and the first shutdown was started in Tangshan at the beginning of this month.
Handan Iron and Steel Corp. has also acquired some cutting-edge equipment, including a 1.3 million-ton cold-rolled sheet steel production line, which can help produce more fine steels and thus improve their competitiveness significantly.
Zhang Guilei, general manager of Tangshan Jianlong Iron and Steel Group said 'the competition in steel industry, to some extent, is a race of innovation. Companies will win only when they speed up its innovation and improve technics.'
Growing private enterprises
Private enterprises encouraged to take part in the steel sector by the government has grown into an important power, accounting for more than 36 percent of the national output.
In Hebei, private steel companies produced 51 million tons of steel during the first ten months of this year, or 66.11 percent of the total output of the province.
Jiangsu Shagang Group Co. Ltd., a private steel company, has become China's fifth largest steel company with an annual sales revenue exceeding 40 billion yuan (5.11 billion U.S. dollars).
'Private enterprises will force state-owned steel companies to speed up the adjustment of products structure and reshuffle, thus upgrade the iron and steel industry as a whole,' said Xin Zhichun, director of Tangshan development and reform bureau.
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