Strengthening steel production facilities in Northwest China

China Baowu Steel Group (Baowu), the largest steel producer in China as well as the largest steel producer in the world, continues to expand its capacity and internal strength at the same time, taking the final step to strengthen its position in Northwest China through the acquisition of existing steel mills. and iron ore mines, says Mysteel Global.

On November 25, Baowu, through its subsidiary in Xinjiang in northwest China, Xinjiang Tianshan Iron & Steel (Tianshan Steel), acquired about 77% of the shares of Yili Iron and Steel Group (Yili Steel) for 1.45 billion yuan (2.2 million US dollars) at the latter. 31 individual shareholders, shortly after the acquisition of the full ownership of Xinxing Ductile Iron Pipes Xinjiang Co (Xinxing Ductile) on November 19 for a price of 2.2 billion yuan, according to related official statements.

Tianshan Steel is a joint venture between Baowu and its two other subsidiaries, including Bayi Steel, formed in April as the acquisition and management of Baowu's steel assets while consolidating blast furnace steel capacity in Xinjiang, Xinjiang Bayi Iron & Steel (Bayi Steel), Baowu's other division, which is listed on the Shanghai Stock Exchange, is explained in the November 24 notice.

Bayi Steel owns 20% of Yili Steel.

Tianshan Steel intends to achieve this target in three years, relying on market forces and economic means, which will allow Bayi Steel to increase the utilization of steel capacity, optimize resource allocation, reduce logistics costs and unnecessary price competition between local producers, and protect Bayi Steel's share of local market, Bayi Steel said.

In five years time, Tianshan Steel and Bayi Steel will resort to various means, such as consolidation and asset swaps, to eliminate their internal competition in steel production.

Xinjiang authorities approved a series of new steel projects around 2007-2008, leading to severe overcapacity due to limited demand in the local market or more generally in Northwest China due to the relatively underdeveloped regional economy, while sale of steel to other countries. Mysteel Global understands that regions lack price competitiveness while adding logistics costs.

“Tianshan Steel has taken responsibility for effectively dissolving surplus steel capacity in Xinjiang, maintaining a fair and orderly local steel market, and it is progressing in line with the plan to consolidate steel plants in Xinjiang,” Bayi Steel said in another document. release

will take place on November 25. Bayi Iron & Steel became a subsidiary of Baowu in 2007 with an annual production capacity of about 10 million tonnes of steel, and Xinxing Ductile is one of two seismic resistant and high strength reinforcing bars manufacturers in the Xin area.