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| HeBei Province Expected to Establish Two Steel Group in South and North Area Chinese steel industry¡¯s large-scale reconstruction has gradually commenced. According to vice-governor of HeBei province GuoGengMao, they would reconstruct six large steel companies and establish two large steel group HanSteel and TangSteel respective in south and north of HeBei, whose steel annual capacity will be above 10 million tons. ¡°Guide to Steel Industry Development Policy¡± Expected to Be Published In order to better carry out the steel industry development policies, state community of development and reformation organized relating units such as China iron & steel association, China iron & steel research center, China metals academy to compile ¡°Guide to Steel Industry Development Policy¡±. Now the first draft of the guide has finished, it¡¯s expected to be punished by economy and science publishing company. Merger set to create steel giant Two of China's 10 biggest steelmakers will be merged to create a behemoth with an annual output of 20 million tons - a move foreshadowing consolidation in the sector. Anshan Iron & Steel Group (Ansteel) and Benxi Steel (Bensteel) will be combined to form Anben Steel Group Company, it was announced yesterday in Shenyang, capital of Northeast China's Liaoning Province. "The two companies are among the most important steelmakers in China and play a big role in the market. The merger would greatly improve their competitiveness and position in the international market," said Zhang Guobao, vice-minister of the National Development and Reform Commission (NDRC), the country's policy-making body. Less than one month ago, the NDRC issued a steel industry development policy which encourages domestic steelmakers to form bigger entities each with annual output touching 30 million tons by 2010. The formation of Anben Steel will be handled by a committee headed by Liu Jie, general manager of Ansteel, and Zhang Yingfu, board chairman of Bensteel. Ansteel is the nation's second-largest steelmaker based in Anshan city. Last year, output reached 11.3 million tons and profits were 10.8 billion yuan (US$1.33 billion). Bensteel's output was around 7 million tons last year. The combined production capacity of the Anben group would be a match for industry-leader Baosteel, according to Liu Jie. China's steel output last year was around 270 million tons, statistics from the China Iron & Steel Association (CISA) show. Total production touched 100 million tons in 1996 and the country has been the world's No 1 steelmaker for the past nine consecutive years. However, production is mostly of crude steel and many high-end products are imported. "The motivation behind the merger is the desire to improve the competitiveness of steel plants by blending good management with that of other plants and giving the resultant company a much better international standing," said Luo Bingsheng, vice-chairman of CISA. There are at least two good reasons for the merger, the expert said - one is raw materials and the other is marketing. Both Ansteel and Bensteel hold rich iron-ore reserves, which account for a quarter of the nation's total. The merger would help give them more bargaining power while purchasing raw materials and control costs. The other one is marketing of rolling steel, a premium product. Their combined output is around 10 million tons, which is even higher than that of Baosteel, which would give them an advantage. Moreover, the two companies could share technology, research and marketing channels, said Liu. International steel giants have set up joint ventures or bought out Chinese steel companies in recent years. The Netherlands-based Mittal Steel, the world's largest, bought about 37 per cent of Central China's Hunan Valin Iron & Steel Group Co in January; and is said to be in negotiations with South China's Kunming Steel. Feng Guisheng, an economist at the Liaoning Academy of Social Science, suggested that Anben Steel may tie up with other State-run and private steelmakers in Liaoning Province to further improve its scale. It is said that Liu Jie has a more aggressive plan to unite all eight big steel plants in northeastern China to former a gigantic steel group. No Low-cost Steel Production Due to the price hike of iron ores as well as coal, electricity and oil since this year, China's steel industry cannot continue its low-cost production as before, according to China Steel and Iron Association. The change of external environment has severely restricted the development of China's steel industry, said Vice President Luo Bingsheng of the China Steel and Iron Association. Since April 2005, the price for imported iron ores jumped 71.5 percent, bringing enormous pressure to China's steel plants. In the first five months this year, the cost for pig iron production, which had soared by 44 percent in 2004, rose 14.92 percent, figures show. China is now the world's largest iron ores importer. In the first half of this year, China imported 130 million tons of iron ores, accounting for over 30 percent of the global shipment. Those steel plants located in hinterlands pay much more for imported iron ores transport than those located in coastal areas, Luo said. As the production cost keeps rising, restructure and regroup have become major tasks faced by China's steel and iron industry, he said. The China Steel and Iron Association expected China to produce raw steel of 332 million tons this year, up 21.63 percent and larger than the domestic demand. Some experts suggest steel plants to optimize their industrial structure and produce more products with high added value and advanced technological level. Nation to import 240m tons of iron ore China is expected to import 240 million tons of iron ore this year, up about 15 percent over last year, a source with the Ministry of Commerce said on Tuesday. The ministry predicted that China's import of iron ore will notincrease rapidly in the next few months and the price will go downby a large margin from last year's level. In the second half of 2005, the impact of state macro-control policies will go on to be apparent, which will bring the slowing-down of the growth of iron and steel industry and further ease the demand for iron ore. On the other hand, the supply of domestic iron ore is going up,said the ministry, noting that the domestic iron ore output for the whole year is estimated at 370 million tons for the whole year, up 19 percent on a year-on-year base. In the first six months this year, domestic iron output reached174 million tons, up 26.5 percent over the same period last year. In the January-June period, China imported 130 million tons of iron ore, up 34.5 percent on a year-on-year base. The growth rate was six percentage points lower than in the same period of 2004. China is now the biggest importer of iron ore in the world. In 2004, China imported 208 million tons of iron ore, accounting for one third of the world's total maritime trade volume. www.chinaisa.org.cn/en 2005-8-21 Heavy and chemical industries to be out of Beijing proper Shijingshan District of Beijing is regarded as a traditional area of heavy and chemical industries due to the numerous large enterprises there. However, as Shougang Group (also Capital Iron and Steel Group) started relocation, the situation, which has remained for decades, will be fundamentally changed. Shijingshan District will build a super large recreation base, and will set tertiary industry as its dominant sector, said Zhang Libing, executive vice district governor at a news conference on August 1. This means heavy and chemical industries will disappear from the map of Beijing proper. According to the latest edition of the overall planning of Beijing, after the movement of steel-related industries, Shijingshan District will vigorously develop recreation, business Metallurgical Enterprises¡¯ Profit in Ningxia Down 83.63% in H1 With deteriorating in market circumstance, metallurgical enterprises in Ningxia Hui Autonomous Region obtained industrial added value of 1.413 billion yuan in the first half of 2005, down by 8.84% from the same period of last year; profits of 29.62 million yuan, down 83.63% and delivery for export value of 658 million yuan, down 25.12%. The reasons of slowdown in the industry lie in increasingly tightened macro policies, imbalance of supply-demand situation, difficulties in cost control, pressure from environmental protection, financial problems and enhancing competitions in the region. The Top 100 Companies in China To help investors gain a better understanding of the corporate sector in China, Standard & Poor's has conducted a statistical survey of the Top 100 listed corporations in the country. This is the third year that Standard & Poor's has reviewed these leading corporations. The selection criteria are based on the latest available revenue size. (See "Sizing Up China's Corporate Elite" for the top outfits' growth outlooks. And check out BW Online's in-depth coverage of the yuan revaluation and its implications.) Ranking Company Annual Sales (Mil. Yuan) 1 China Petroleum & Chemical 590,632 2 PetroChina 388,633 3 China Mobile 192,381 4 China Telecom 161,212 5 China United Telecommunications 79,332 6 China Netcom Group 64,922 7 Minmetals Development 64,593 8 Baoshan Iron & Steel 58,638 9 Cnooc 55,222 10 China Resources Enterprises 50,105 11 Sinopec Zhenhai Refining & Chemical 41,991 12 TCL Corp. 40,282 13 Sinopec Shanghai Petrochemical 39,403 14 Aluminum Corp. of China 32,313 15 Sinopec Yangzi Petrochemical 31,774 16 Air China 30,835 17 Huaneng Power International 30,293 18 Jilin Chemical Industrial 27,903 19 Maanshan Iron & Steel 26,770 20 China International Marine Containers 26,568 21 China Southern Airlines 24,194 22 Wuhan Iron & Steel 24,148 23 Lenovo Group 23,991 24 Hunan Valin Steel Tube & Wire 23,786 25 Angang New Steel 23,228 26 Zte 22,698 27 Shanxi Taigang Stainless Steel 22,410 28 China Shipping Container Lines 22,364 29 Tangshan Iron & Steel 21,884 30 Sinotrans 21,880 31 Beijing Shougang 21,074 32 China Eastern Airlines 19,893 33 Handan Iron & Steel 19,453 34 Guangdong Midea Electric Appliances 19,201 35 Jinan Iron & Steel 19,147 36 Chongqing Changan Automobile 18,527 37 Sinopec Beijing Yanhua Petrochemical 17,940 38 Bei Qi Foton Motor 17,886 39 COFCO International 17,872 40 Laiwu Steel 17,762 41 Bengang Steel Plates 17,349 42 Inner Mongolia BaoTou Steel 16,246 43 Digital China Holdings 15,457 44 Qingdao Haier 15,299 45 Jinzhou Petrochemical 15,038 46 Xiamen C&D 14,378 47 Shanghai Construction 14,165 48 Gree Electric Appliances (Zhuhai) 13,833 49 Shanghai Friendship Group 13,753 50 Datang International Power Generation 13,584 51 Panzhihua New Steel & Vanadium 13,439 52 Konka Group 13,363 53 Sinopec Yizheng Chemical Fibre 13,348 54 Sinochem International 13,006 55 AnYang Iron & Steel 12,918 56 AviChina Industry & Technology 12,877 57 Boe Technology Group 12,442 58 Yanzhou Coal Mining 12,209 59 Torch Automobile Group 11,540 60 Sichuan Changhong Electric 11,539 61 Great Wall Technology 11,419 62 Weiqiao Textile 11,088 63 Shanghai Pharmaceutical 10,815 64 Jiangxi Copper 10,627 65 SGIS Songshan 10,329 66 Beijing Enterprises Holdings 10,287 67 Ningbo Bird 10,246 68 Nanjing Iron & Steel 10,226 69 Huadian Power International 10,175 70 Guangzhou Iron & Steel 10,100 71 Xiamen International Trade 10,096 72 Henan Shuanghui Investment & Development 10,056 73 Hangzhou Iron & Steel 9,955 74 Sinopec QILU 9,842 75 FAW Car Co. 9,643 76 China Overseas Land & Investment 9,179 77 China Oriental Group 9,119 78 Suning Appliance Chains 9,107 79 Nanjing Textiles 8,999 80 Sinopec Kantons Holdings 8,992 81 Gan Su Jiu Steel Group Hong Xing Iron & Steel 8,965 82 Xinxing Ductile Iron Pipes 8,801 83 Inner Mongolia Yili Industrial 8,735 84 Shijiazhuang Refining-Chemical 8,689 85 Lianyungang Ideal Group 8,662 86 Tsingtao Brewery 8,621 87 Shanghai Material Trading Centre 8,576 88 Guangdong Kelon Electrical Holdings 8,436 89 Hainan Airlines 8,411 90 Anhui Conch Cement 8,385 91 Tsinghua Tongfang 8,149 92 Anhui Jianghuai Automobile 8,069 93 Semiconductor Manufacturing International 8,067 94 TCL Communication Technology 7,780 95 GD Power Development 7,752 96 Guangzhou Pharmaceutical 7,708 97 CNHTC Jinan Truck 7,683 98 China Vanke 7,667 99 Hisense Electric 7,500 100 Shanghai Automotive 7,491 China issues new policy on steel China issued its first state policy on the iron and steel sector here Wednesday, raising the industrial thresholds for foreign investors and imposing tighter controls on market access. According to the new policy, foreign steel companies who plan to invest in China must have full intellectual property rights on their iron and steel products. Their output of common steel in the previous year must reach at least 10 million tons. That of high-alloy steel must reach one million tons. If the foreign investor is not in iron and steel business, it must prove strong financial capability and high credibility by paperwork from the banks and accounting firms, said the new policy. China is the world largest iron and steel producer as well as consumer, said Liu Tienan, director of the industrial department of the National Development and Reform Commission. But it is entering a critical moment when the whole sector is being strained by numerous problems like overheated investment, improper industrial structure, poor quality of products and worsening environmental pollution. Through the new policy, China expects to guide the direction offoreign investment into China's steel and iron sector and put the sector on the right track of development, said Liu. Liu stressed an important point in the new policy: foreign investors can not set up new conglomerates in China. Foreign capital should be invested in the upgrade or removal of existing conglomerates. Actually, no more conglomerates, no matter if they are funded by domestic capital or foreign capital, will be approved in principle, said Liu. China will tighten its control of the production capacity of the iron and steel industry to rein in the total output, said Liu. Conglomerates will assume a bigger role amidst a new round of industrial restructuring. The aggregated steel output of China's ten biggest players is expected to make up 50 percent of the country's total by 2010, and over 70 percent by 2020, said the new policy. China's daily crude steel production stands at around one million tons on average in the first five months, said Liu. This year's output is expected to exceed 3 million tons. Quantity of Steel Import Decreasing 26.5% in China In First Half Year According to data from customs general administration, in first half year of 2005 the import of auto and steel products decrease markedly, however the drop continues to tighten. In first half year of 2005 import of auto is 64,000 units, down 33.6% and import of steel products is 13.22 million tons, down 26.5%. Iron ore import 130 million ton, up 34.3%, coal import 12.09 million ton, up 56.1%. Beijing No Longer Encourages Steel-related Industries Deputy director of State Environmental Protection Administration of China unveiled yesterday that Shougang will move out of Beijing by 2010 at latest, and the city will no longer encourage steel-related industries. The metropolis government has mapped out a series of measures to protect environmental pollution, which including elimination of coal burning boilers in all of Olympics stadiums and gymnasiums and adjustment in the industrial structure. 38 State-owned Key Metallurgy Companies¡¯ Profits Growth Rate Slowing In Jan.-Apr. In Jan.-Apr. 2005 38 state-owned key metallurgy companies has achieved industry production value 289.09 billion Yuan, up 26.4% and the growth rate decreases 4.3 percentage points compared with that of the first quarter. Their main business revenue is 313.5 billion Yuan, up 25.9% and the growth rate increases 1.6 percentage poinst. What¡¯s more, their profits is 30.75 billion Yuan, up 21.6% and the growth rate decreases 5.3 percentage points. Output of Sheet, Pipe and Strip Accounted for 44.51% in Q1 The output of sheet, pipe and strip steel amounted to 36.735 million tons during the first quarter, accounting for 44.51% of the total finished steel production, up 2.03% from the same period of last year, suggesting a significant achievement in the structural adjustment in the domestic steel market. Of that total, productions of sheet and strip were 31.7278 million tons, up 29.84%; that of tube like seamless and welded pipes was 5.0072 million tons, representing for 6.07% of the totals. China¡¯s Steel Consumption Continues to Stay High Level in the Next Five to Ten Years With the development of manufacturing and infrastructure, China¡¯s steel consumption will continue to stay at high level in the next five to ten years and then gradually step into a steady situation, according to the forecast from Xu Kuangdi, President of Chinese Academy of Engineering. He said the positive factors will still exist in the development of steel industry during the next ten years and Chinese economic growth will maintain higher enough than the average level worldwide. He also pointed out energy and environmental protection will become major obstacles in the development of household steel industry, and technology upgrade and innovation are the only solution towards establishment of green steel industry that consumes low energy and low resource. Steel & iron sector seeking for signpost Ma Kai, Minister of the State Development and Reform Commission, has pointed out recently that the cyclic economy is the only way to sustain the growth of China's iron & steel industry which is seeking to develop more muscle. He noted that the macro-control in the sector would be focused on a reasonably designed scale, improved structure, exports adjustment and curbing the rising prices of rolled steels. He urged steel giants to beef up their partnership with foreign resources suppliers by placing long term orders. He required that steel makers conduct clean and efficient production and reduce waste drainage as much as possible. He warned about the excessive production capacity for the anticipated domestic demand which he thinks should be the purpose of the capacity. He encouraged steel makers to create group corporations through mergers, acquisitions and share holding. As he is deeply concerned about the imminent irrational lay-out of the industry, he strongly advised transformation and extension in areas with advantages in resources, energy and transportation. It is the pressing task, he said, to turn out steel products for high-market and discard obsolete techniques. He highlighted the significance of innovation and intellectual property rights. He supports listing on the overseas market with less state-ownership. However, he stressed at the same time on the necessary power of the state shares. According to the news release by China Iron & Steel Association by the end of last month showed shrinking domestic demand and fixed asset investment, more products for high-market, higher exports, narrowing price disparity between home and world market and good corporate performance in China?¡¥s iron and steel industry for the 1st quarter of the year. Beijing to have cleaner air as steel giant leaves town£¨2005/06/13£© BEIJING, June 9 (Xinhuanet) -- Beijing's air quality will be greatly improved by 2010 when Beijing Shougang Group, China's fourth largest steel manufacturer, has moved its plants to a neighboring province, said an environmental researcher Thursday. "Shougang annually discharges 18,000 tons of solid particulate matter, accounting for more than 40 percent of that discharged by the whole industrial sector of the city," said Cai Hefa, a researcher from the China Environmental Science Research Institute at a forum on the relocation of the steel giant. "That has put heavy pressure on Beijing's environmental protection, however the situation will be better by 2010," said Cai. Located in Beijing's western suburbs, just 16 kilometers away from the Tian'anmen Square, Shougang Group (also Capital Iron and Steel Group) has been widely been cited as one of China's flagship industries. But in the past decade, it has become synonymous with chimneys belching out thick clouds of smoke. Shougang is now one of the capital's worst polluters. According to sources from the Beijing Environmental Protection Monitor Center, the air quality of Beijing has improved in recent years. In 2004, 62.5 percent of the days were ranked "fine" or "fairly good" with pollution reading below 100. But in Shijingshan district in western Beijing, where Shougang is located, it was only 50.4 percent. The 86-year-old company has spent more than 2 billion yuan (241million US dollars) on pollution control but still cannot meet the requirements for the Olympic Games, said Xue Wanqing, the director of the environment protection office under the group. According to a plan approved by the State Council earlier this year, Shougang will relocate most of its existing production facilities to a new base built in neighboring Hebei Province. "We'll take substantial measures, including production slowdown and suspension, to reduce pollution as we are able to move all the polluting plants by the time the Olympics opens," said Xue, adding the iron and steel smelting capacity will be reduced by 4 million tons by the end of 2007. With an expected annual production capacity of eight million tons, the new base covers about 20 square kilometers will be located in Caofeidian, an island 80 km south of Tangshan, a scenic coastal city in Hebei Province, said Xue. Shougang's headquarters, research and development section, sales department and logistical center will remain in Beijing. The company plans to develop non-steel-making sectors such as real estate and mechanical and electrical industries at the vacated site, said Xue. "With new equipment and advanced pollution control technology, the new base will not damage the ecological environment in Caofeidian," said Xue. Cai also support Xue's opinion by saying that the special geographical and meteorological conditions in Beijing make it difficult to clear off pollutants. "In Caofeidian, where is near to the sea, pollutants are hard to assemble, which is of great help to protect local environment,"said Cai. China leads the world in steel output Global steel output increased 6.5 percent in the first quarter of this year, and China was among the fastest increasing producers, said the International Iron and Steel Institute (IISI). Statistics from 61 countries published on IISI website showed that during the first quarter crude steel production increased 26.72 billion tons, registering a growth rate lower than the 8.8 percent in 2004. But China's steel output soared by 23.8 percent to reach 77.8 million tons. EU output during the first quarter dropped 0.3 percent to 48 million tons. The world's largest steel group, Arcelor, said on March 25 that due to slack European markets, production of all its four plants in Europe would be cut. In North America, US output increased 1.1 percent while Canada's decreased 2.1 percent. Iron, steel sector awaits new policy(2005/04/27) China's iron and steel industry is set to be transformed in the near future, as the central government will soon introduce a new industry policy to regulate the fast-expanding sector. The executive meeting of the State Council chaired by Premier Wen Jiabao on Wednesday gave the go-ahead to the long-awaited China iron and steel industry development policy. "Before the policy is finalized , the top decision makers will need to make some adjustments to the specific rules based on feedback from the government's different departments," Li Xinchuang, vice-president of the China Metallurgical Industry Planning & Research Institute (CMIPRI) told China Daily last week in a telephone interview. Li has participated in the drafting of the policy since 2002. "It will be finalized quite soon, as the main points have been hammered out by the top decision maker ," added Li, who indicated the policy would be finalized within a matter of weeks. Last week's executive meeting warned that China's on-going industrialization and urbanization has greatly increased the country's demand for iron and steel products, but excessive and unregulated investment in the essential industry risks creating an imbalance in overall economic growth, the waste of energy resources and severe environmental pollution . China produced 270 million tons of steel last year, making it the world's largest steel producer, to satisfy the 50 million-ton increase in demand from 2003. The industry policy, a guideline for the long-term development of China's iron and steel industry, aims to increase the concentration of steel production by the large State-owned steel makers such as Baosteel and to boost the industrial upgrading of the steel sector through new technologies and management and production efficiency. As a long-term strategy, the policy will not have an immediate impact on the country's economy, but will have a "far-reaching influence on China's iron and steel industry," said Qi Xiangdong, vice-secretary-general of the China Iron and Steel Association. "The country's steel production this year, which is expected to top 300 million tons, will not be affected by the new policy, " said Zhou Xizeng, a senior steel analyst with CITIC Securities. "The policy is conducive to the industry's sustainable and healthy development in the long run," said one of its drafters, CMIPRI's Li. Li said the policy covers very detailed aspects of the steel sector, from corporate management to government macro-controls, and is "very comprehensive and feasible." Several auxiliary regulations might follow the issuing of the principal guideline, say industry experts. The National Development and Reform Commission, China's top policy planner, is working on a steel industry development plan by 2020, according to Wu Pengfei, an industry analyst in steel with Beijing-based Guotai & Jun'an Securities. Also , the central government will cut the steel export rebate rate from the current 13 per cent to 11 per cent from May 1 after the elimination of the steel billet export rebate on April 1, in a move to reduce exports of the high energy-consuming products, say insiders. "This (the export rebate cut) can be taken as a measure accompanying the industry policy," said Zhou. "But the move will not have an obvious impact on steel exports this year, because the reduction in rebate rates is very slight," he added. China exported 14 million tons of steel last year, more than double the figure of 2003, according to Zhou, who said it would be hard to predict the steel exports for this year because of volatile factors such as the price hike of iron ore. Zhou predicted the government might go further and remove the steel export rebates, but did not give a specific timetable. CMIPRI's Li argued the government, by adjusting the steel export policies, should try to create conditions for China's steel makers to compete fairly in the international market. In order to bolster scale production in the steel industry - which is implied in the policy, the country plans to increase the proportion of China's 10 largest steel makers' turnover amongst the total steel production to 50 per cent by 2010, and expects the figure to reach 70 per cent by 2020, according to Li. To date, 15 steel companies in China have boasted an annual production of at least 5 million tons of steel each, revealed sources from the industry's association, and they yielded 45 per cent of the country's steel products last year, . China's largest steelmaker, Baoshan Iron & Steel Co Ltd (Baosteel), earlier this month announced its long-awaited additional share offer plan, with an aim to raise 25 billion yuan (US$3 billion) to acquire steel mills, raw materials, logistics and trading assets from its parent company Baosteel Group. After the acquisition, Baosteel will take over the vast majority of its parent company's steel making capacity, making it the world's eighth largest steel manufacturer, and increasing the company's profit by as much as 37 per cent to 12.9 billion yuan (US$1.56 billion) this year. The government's move to nourish the large State-owned steel makers will lead to a round of shut-downs of the country's small steel companies, as well as many merger and acquisition cases in the steel sector, estimate some industry insiders. "According to the requirements for steel producers specified in the new industry policy, a large number of medium and small-sized steel companies are facing being closed down," said CITIC's Zhou. "And the alternative, if not the shutting-down, might be mergers and acquisitions by the larger steel market players," he continued, saying the government might not want to lose too many small producers in order to maintain the backbone industry's stability. " The industrial shake-ups are to be on a gradual basis," Zhou added. The new policy sets new requirements for steel makers in China in a number of different areas including the scale of production and efficiency, technical expertise, energy consumption and environmental protection performance. According to the policy, a raft of market measures such as tax rebates will also be introduced to promote the high value-added steel production . However, Zhou's predictions are challenged by some other industry insiders. CMIPRI's Li said the policy is not likely to result in a large number of closedowns of small steel makers or mergers and acquisitions in the sector, but will lead to the upgrading of old steel production equipment in these companies. "The outdated facilities in many small steel firms are the main factor holding back their production capacity and account for their huge energy consumption," Li explained. A small steel company in North China's Hebei Province said the new industry policy will not make a great impact on their current operations in the short term, as the government's macro-controls - which are in accordance with the new policy - have long regulated the sector. The company vows to improve their technologies and management through intensified research and development and in partnership with bigger producers. The new policy, which indicates a further restructuring of the steel industry in the future , is estimated by some insiders to provide opportunities for foreign investment to merge with or acquire local companies. But the possibility of a large influx of foreign capital into the country's steel industry is slim, say some analysts, because the foreign steel makers might be confronted with setbacks from the central government's tight project approval. "We still have a requirement for foreign (steel) makers to enter the Chinese market, although the government encourages foreign investment to tap the deep-processing sector of China's steel industry, which will also enhance the local firms' production and management," CMIPRI's Li said. China to "strictly control" investment in steel industry China has to "rigidly control" the growth of fixed assets investment in its iron and steel industry so as to avoid excessive expansion of the sector, said top policy-makers Wednesday in Beijing. Participants of Wednesday's executive meeting of the State Council, China's central government, acknowledged investment on fixed assets in the industry had already been "rather great" at the moment. The meeting, chaired by Premier Wen Jiabao, deliberated on and adopted in principle China's iron and steel industry development policy. The meeting said the industrial mix of China's iron and steel industry has to be further adjusted to ensure the healthy growth of the industry. Manufacture of products that consume a very large amount of energy and materials and cause heavy pollution had to be contained, while export of such products would also be put under strict control. The meeting called for an accelerated shift of the growth mode in this sector, improved efficiency in the utilization of energy and resources, and an "appropriate and economical" use of steel products. The meeting also underscored the importance of facilitate consolidating China's iron and steel sector, optimizing its geographical distribution, and building a solid resource supply system by tapping both domestic and overseas resources. Although it has contributed greatly to China's economic growth, the fast-expanding industry has also strained electric power supply and the country's transport system, causing serious pollution and intensifying international competition for iron ore. China turned out 272 million tons of rolled steel in 2004, making it the biggest steel producer in the world. Industrial insiders say a number of steel production projects involving more than 300 billion yuan (approximately 36 billion US dollars) of investment were under construction at the end of last year. Upon their completion, China's steel production capacity would possibly add another 100 million tons. |
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