Baowu merger achieves 110 mtpa production

2020 will be an unforgettable year in many ways, and for the global steel market, it is a year of investment and sales as while Tata Steel was selling its steel assets outside India, China Baowu Steel Group (Baowu), a leading steel producer in China, intends to become a leader in the world and approach the milestone of 100 million tons per year through mergers and acquisitions.

After a couple of major mergers in 2020 at zero cost, Baowu turned into a 110 Mtpa steel conglomerate, but was not happy with what it had achieved, but was busy contemplating how to increase its competitiveness and realize true consolidation through internal review to find opportunities. internal optimization.

The latest renaming of one of its key steel mills in southern China's Guangdong province - Shaoguan Iron & Steel Co (Shaogang) - on November 20, may well be a typical case illustrating the efforts of the Chinese steel giant to increase its internal strength.

Shaogang, a 6.6 million tonnes /yr Baowu steel plant that produces both carbon and special steels, including stainless steel, posted an announcement on November 20 through its Shenzhen-registered division, informing that it had been given a new name from the group. - Central South China Iron & Steel Co. or Zhongnan Steel.

A spokesman for Zhongnan Steel explained by phone to Mysteel Global that the new name may be related to Baowu's future development strategy as a state-owned company, but declined to elaborate, saying further announcements would reveal more details.

Chinese market sources interpreted the move as a sign for Baowu to expand regional integration of steel assets within China after a series of acquisitions exceeded target.

“When he grows in size through mergers and acquisitions of Chinese steel mills, he is also exploring the possibility of creating some regional centers to better and more efficiently manage all of these steel assets,” commented Xu Xiangchun, senior analyst at Mysteel in the Beijing office. ...

“Zhongnan Steel could become Baowu's center for managing its metallurgical subsidiaries in Central and South China and seeking new acquisition targets in those regions,” Xu said in a market speculation.

He shared that Kunming Iron & Steel Co in Yunnan of Southwest China and Liuzhou Iron & Steel Group in Guangxi, also Southwest China, were envisioned as Baowu's next targets.

In addition, according to Xu, all regional headquarters managers will also have their own niche products, which will differ from each other, thus avoiding unnecessary internal costs