Tuesday , June 28 2022

China would assess the megafusion to create a steel giant


China has appointed former chairman of Baoshan Iron & Steel Co., who chaired the rival group Ansteel Group Corp., which has shown its intention of joining the two parent companies and creating a steel giant that would surpass ArcelorMittal as the world's largest producer, according to people close to the subject. The shares of the publicly traded group divisions have increased.

The combination of the two would help Baoshan's parent company and the largest Chinese producer, Baowu Steel Group Corp, to reach its target of 100 million metric tons of annual production by 2021, and the government to reach its target of concentration of 60 percent of the production in the hands of the 10 major factories by 2020 said that people who asked not to be identified as information are not public, Bloomberg said.

The sources did not disclose the deadlines for the agreement and said the plan could undergo changes

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Baoshan announced on Monday that his chairman, Dai Zhihao, resigned. The State and Surveillance Commission (SASAC), which oversees both companies, said on Wednesday in Weibo's account that Dai would take over as Ansteel's chief executive officer.

The Ansteel Group is the third Chinese steel company, while Baowu is the product of a mega-merger two years ago. Together, both companies produced 101 million tonnes of steel in 2017, according to the World Steel Association, about 4 million tonnes more than Arcelor. At the end of last year, their combined revenues amounted to 493,000 million yuan (71,000 million dollars), slightly above Arcelor's $ 69,000 million.

China, the world's largest steel producer, has as a general objective to improve the sector by controlling capacity, enhancing production and reducing pollution. Speculations about which companies could merge are common and a report in September indicates that Baowu was under discussion to acquire Magang Group Holding Co.

Sasac did not immediately respond to a fax requesting comments. Shanghai Baowu spokesmen and Ansteel, Anshan, Liaoning, said they had no knowledge of the merger plan and declined to comment.

Shares in listed quotes rose, recovering past losses; Baoshan rose to 3.4% in Shanghai and Angang Steel Co., up 8.4% in Shenzhen. Shanghai Baosteel Packaging Co. increased the maximum price variation allowed on the Shanghai Stock Exchange.

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