Ministry of Industry and Information Technology: Supporting multiple restructuring models in the steel industry

On the 19th, the management department of the Chinese steel industry publicly expressed support for the existing domestic steel reorganization model, with a view to accelerating the integration of the steel industry during the “12th Five-Year Plan” period and increasing the degree of concentration.

Luo Tiejun, deputy director of the Department of Raw Materials Industry of the Ministry of Industry and Information Technology, said at the 7th Bohai Sea Steel Market Forum (Lange Steel 2011) held today that the Chinese steel industry has a very large number of reorganization models at present, and the Ministry of Industry and Information Technology has repeatedly studied All forms of support, cross-regional support, regional alliances in the region also support, and several mergers and reorganizations are supported.

According to the "12th Five-Year Plan for Development of the Iron and Steel Industry" recently announced, the Chinese government proposes that in accordance with the principles of market-oriented operation, enterprise-oriented, and government-led, enterprises that conform to the national steel industry policy should be the main body of mergers and reorganizations. Encourage social capital to participate in the merger and reorganization of state-owned steel companies. However, the plan is also clear, focusing on supporting the advantages of large steel companies to carry out cross-regional, cross-ownership mergers and acquisitions.

The Chinese government has always encouraged the merger and reorganization of the steel industry. However, in recent years, with the changes in the restructuring model of the domestic steel industry, it has caused a lot of controversy. For example, Hebei Province, Hebei Province, Shandong Iron and Steel and other provinces within the regional joint model was once questioned by the executive order "Lang Lang match", while Baosteel has been adhering to the market-oriented cross-regional restructuring model has been blocked, but also concerned about including the creation of Shougang Floral arrangement reorganization, managed reorganization, etc.

Luo Tiejun said that in reality there are contradictions among these models, but the Chinese steel industry is too large in scale to allow various attempts. Therefore, the Ministry of Industry and Information Technology has decided to support them.

The “Twelfth Five-Year Plan for Development of the Iron and Steel Industry” proposed that the “12th Five-Year Period” period should significantly reduce the number of steel companies. The ratio of steel output of the top 10 steel companies in the country to the national total increased from 48.6% to 60. %about.

In addition, the plan also proposes that the Bohai Rim and Yangtze River Delta region will no longer approve the construction of new iron and steel bases in principle, and the “Twelfth Five-Year Plan” will focus on the construction of southeast coastal steel bases. Luo Tiejun said that the current layout of the domestic steel industry has basically taken shape. After the completion of several fine iron and steel bases on the southeast coast, it will not be further adjusted. The words of the official in charge indicated that the adjustment strategy for the relocation of the Chinese steel industry that had been insisted on by the Chinese steel industry has been adjusted.

The new planning principles are not good news for companies that rely on the construction of new, fine iron and steel bases to achieve mergers and reorganizations, such as the joint establishment of Shandong Iron and Steel and Tangshan private enterprises. Prior to this, Shandong Iron & Steel had been examining and approving the establishment of a premium iron and steel base with a capacity of more than 10 million tons in Rizhao. At present, Shandong Iron and Steel's restructuring process has also been paralysed by Rizhao Steel.

Luo Tiejun said today on this issue, “How is sunshine still built? There are 13 million tons to 15 million tons of capacity currently placed there. Now the key is how to transform and upgrade. One of the principles we propose is reduction adjustment”. In October of this year, the State Council just approved the "Request for Guidance on the Pilot Work of Steel Industry Structure Adjustment in Shandong Province."