International Steel Mills
Baosteel and Wuhan Contemplating Merger
Written by Sandy Williams
June 28, 2016
Baosteel and Wuhan Iron and Steel Group (Wisco) are contemplating a merger that would unseat Hebei Iron and Steel Group as China’s largest domestic producer and rival European steelmaker ArcelorMittal.
A merger of China’s second largest steelmaker Baosteel with fifth ranked Wisco would create a combined output of approximately 70 million tonnes. The merger would place the new company as largest in China, ahead of Hebei Iron and Steel’s 47.5 million tonne capacity. On a global basis the new company would take second place behind ArcelorMittal which produces 97.14 million tonnes annually.
In recent years both companies have absorbed smaller mills, removing outdated capacity and improving efficiency. A combination of the two could save even more by eliminating redundant facilities and improving resource allocation.
Baosteel and Wisco are directly administered by the Central Government and Wisco is chaired by Ma Guoquiang, a Baosteel veteran. A merger would fit well within the government’s plans to consolidate the domestic steel industry and reduce overcapacity.
China’s steel industry has been hurt by a domestic economic slowdown and by a deluge of trade cases from around the world against Chinese steel exports. Cited as responsible for the majority of steel overcapacity, Beijing has promised to reduce capacity by 45 million tonnes in 2016 and by 100 to 150 million tonnes over the next five years.
Baosteel and Wisco filed notice of “strategic restructuring” with the Shanghai Stock Exchange on June 26 and requested trading of their stocks be suspended as of June 27. The statements said more information would be released after five trading days.
Sandy Williams
Read more from Sandy WilliamsLatest in International Steel Mills
SSAB adjusts output in weak Q3, readies for Q4 rebound
SSAB said lower plate prices in the US were the primary reason for reduced results in the second quarter. With a dismal Q3 outlook, the Swedish steelmaker is adjusting production across its facilities. That includes moving up its annual US mill outage in anticipation of a better Q4. SSAB Americas Revenues in the Americas segment […]
Global steel production dipped in June
Global steel output eased 2% in June following May’s 14-month high, according to World Steel Association’s (worldsteel) latest release.
Union rejects proposal to end strike at ArcelorMittal Mexico
The local mining union has rejected a proposal to end the labor strike at ArcelorMittal Mexico’s Lazaro Cardenas mill and Las Truchas mine in Michoacán, Mexico.
NLMK mill targeted in Ukrainian drone attack
Novolipetsk Steel’s (NLMK) mill in Lipetsk, Russia, was the target of a raid by Ukrainian drones on Sunday, according to a Reuters report.
USS and Nippon clarify position on US trade case participation
U.S. Steel and Nippon Steel explained their position on USS’ participation in US trade cases should their proposed nearly $15-billion merger deal go through. The companies hope to close the deal by the end of the year.