Others News
- Baosteel aims to double output capacity
Date: 6-Sep-2007 Sources: (Shenzhen Daily)
BAOSTEEL Group Corp., China's biggest steelmaker, plans to more than double its steel capacity to 80 million metric tons by 2012, closing the production gap on the top global mill, Arcelor Mittal.
Baosteel, which has a capacity of 30 million tons, will grow in China and overseas through acquisitions, the Shanghai-based company said yesterday. It plans to boost sales to US$50 billion and profit to US$5 billion by 2012.
The government is backing mergers among State-owned steelmakers to compete against overseas rivals who are increasing acquisitions. The nation's steel usage may rise 12 percent to 446 million tons this year and to as much as 520 million metric tons by the end of the decade driven by demand for autos and appliances.
'Government support on domestic mergers, the intensifying competition on global acquisitions and the need to help dilute climbing raw-material costs has pushed Baosteel to speed up its expansion,'' said Helen Lau with Daiwa Securities Group Inc. 'Baosteel's 80 million-ton target is realistic should they complete the potential takeovers.''
The 80 million-ton target would make Baosteel the world's No. 2 steelmaker by 2006 output ranking, leapfrogging Nippon Steel Corp., JFE Holdings Inc. and South Korea's Posco. Arcelor Mittal produced 118 million tons last year.
Mittal Steel bought Arcelor SA last year for US$38.3 billion to form the world's largest steelmaker and in January, India's Tata Steel Ltd. bought Corus Group for US$12 billion. Steelmakers want greater control over production to bolster heir bargaining power with clients and suppliers as costs gain.
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