Baowu Iron and Steel Group, China's leading steel company, plans to merge with domestic rival Maanshan Iron and Steel to compete with Arcelor-Mittal, the world's largest steel company. According to three reliable sources: As the second largest steel company in the world, Baowu Iron and Steel Group is currently in talks with domestic rival Maanshan Iron and Steel. If the merger and acquisition can be completed, the industry consolidation plan promoted by the Chinese government can take an important step forward for the Chinese steel industry.
At the same time, the distance from the world's first steel company is expected to shrink significantly. The total output of Baowu Iron and Steel and Maanshan Iron and Steel in 2017 was about 85 million tons, exceeding the steel supply in the United States, and only slightly lower than ArcelorMittal.
At the same time, China Baowu Iron and Steel Group is expected to be closer to its corporate goals, and by 2021, its production capacity will increase from nearly 70 million tons to 100 million tons. However, an insider said that the negotiations between the two companies are still in their infancy. Chinese officials do not yet know the news. Neither company has announced a possible price nor has it made a statement.
Two years ago, Baosteel acquired Wuhan Iron and Steel Company and established Baowu Iron and Steel Group. Baowu Steel mainly produces industrial flat steel, while Maanshan Iron and Steel mainly produces construction steel. The two steel groups mainly supply steel products to the Chinese domestic market. At the end of last year, Baowu Iron and Steel Group's assets were worth 92 billion euros, and Maanshan Iron and Steel's assets were close to 9 billion euros.
The Chinese government plans: By 2020, nearly 60% of steel in the domestic market will be supplied by the top ten domestic steel manufacturers. Under the influence of domestic overcapacity, this proportion is only one third. On the one hand, it is expected to achieve this goal by closing small and inefficient factories and on the other hand through mergers and acquisitions.