Saturday, December 03, 2005

Chinese steel industry must consolidate

Reports in today's Star Online discuss the fragmentation of the steel sector in China, and the likely medium-term pressure for consolidation of the industry, which now totals over 800 steel manufacturers.

Mergers and acquisitions are to be the principal tool in attaining an industry structure whereby the top 10 suppliers have a market share of ~50% by the year 2010. According to the China Iron & Steel Association, over the next two or three years the top 15 Chinese steelmakers are likely to transform into five industry leaders, each with an annual steelmaking capacity of about 30 million tonnes.

Industry observers suggest that such change would be instrumental in stabilising prices, improving product quality and increasing purchasing power for key raw materials. For original article, see