Wednesday, September 9, 2015

Wuhan iron and steel in Baosteel merger is no action, the former State Bureau

First major steelmakers, Baosteel, its Chairman, Mr Xu was also a "full of bitter" to describe several mergers. Oriental IC data

China's economy bid farewell to the March of time, the traditional steel industry from autumn into winter. Steel industry mergers and acquisitions have become bigger and stronger before, converted to hold together for warmth.

Under the State-owned enterprise reform, Baosteel, Wuhan iron and steel fermentation since merger since March 2015, merger and reorganization of iron and steel industry as a whole is also considered "wind." But an old lead surging on news of the State Bureau of metallurgical (www.thepaper.CN) says this could have been put on hold, "Baosteel, WISCO, angang bundled together in this matter, as far as I know-SAC there is no person to go on this matter. I recently convened by the Ministry with the participation of the Chinese Thirteen-Five steel industry planning meeting, and there is no discussion in this regard. "

Another senior experts in the steel industry are surging on the news (www.thepaper.CN) says, "Baosteel earlier acquired eight steel, sisg, already carry a burden", estimates can no longer carry the burden for a short time.

For iron and steel enterprises are in a desperate situation, merger and reorganization factors like a lack of security incident, the parties are wary, the slightest mistake would lead to disruptive failures. These two groups have a common opinion: on industry-wide losses most of the main steel industry, is the end of winter when everyone is most concerned about, and the steel industry now wants to change the corner, the first task is to resolve the overcapacity.

These senior experts and metaphor: "the steel industry is now a slow process of weight loss, reduced effectiveness, then talk about marriage".

According to the original understanding of the leadership of the State Bureau of metallurgical, in this case, major steelmakers merge segue between "form 3~5 home with strong competitiveness in the world ultra large-scale iron and steel enterprise group" that guide policy, and may not appear in the steel and iron industrial adjustment policy (revised in 2015) in the final.

"Lang" by "hand of the market" submission

Merger and reorganization of iron and steel industry is not a new topic, but its mission has changed.

Former senior expert on surging News (www.thepaper.CN), "said foreign mergers is to capacity, our previous merge mainly to big". At present, mergers and acquisitions have become compressed capacity of main channels.

Worth noting is that mergers in the steel industry has actually been implemented for many years, but the real success story is not much. First major steelmakers, Baosteel, its Chairman, Mr Xu was also a "full of bitter" to describe several mergers.

In the first half of this year, Xu lejiang told the weekly financial country mentioned in an interview, Baosteel took 17 years to basically solve the steel, and steel the rehousing problem of a hundred thousand of people. Human problem solving, cultural integration is difficult, there is in solving the problem. In the reorganization of the Army Day, Shaoguan iron and steel iron and steel also has this problem. Xu lejiang over remarks in 2013, it said, "if not under the State Council ordered Baosteel annexed, Baosteel's merger and reorganization of an enterprise will not, because the merger and reorganization of China's policy environment is still not resolved."

Merger and reorganization of China's iron and steel industry to encounter such embarrassing facts, its source lies in the "lang" by. "Lang" by mode, the specific policies to implement, including exit, ownership boundaries are not being broken. Former senior expert, "said lang distribution have all failed, Government-led restructuring before without success." The expert believes that, "at present, power is mainly vested in the life and death of the iron and steel enterprises market and environmental protection are the two hands".

Xin Renzhou, Deputy Director of the Ministry of industrial policy Division in a surging News (www.thepaper.CN) said in an interview, "now merger and reorganization of the main market-oriented, rely on businesses to promote".

"3~5 Enterprise" is no

Now cited Baosteel, Wuhan iron and steel merged from time to time, direct triggered in March 2015, the steel industry policy issued by the Ministry (revised in 2015) (draft for soliciting opinions) (hereinafter referred to as the draft Protocol).

The draft refers, further optimizing adjustment of organizational structure, accelerate the pace of mergers, by 2025, the top ten iron and steel enterprises crude steel production accounted for the proportion of not less than 60%, form 3 to 5 families worldwide have strong competitiveness of super large iron and steel group.

Above the old leader, "said the draft of the statement, means that for several large steel groups together, and in fact many companies are opposed. I attended that meeting, '3~5 enterprises ' in this proposal the proponent also said that now that we are against it, then weigh again. "

According to the former leader, can understand the above reference was intended to encourage mergers and reorganization of enterprises, but hope the Government will not intervene, don't set limits, "that 3~5 mentioned, the Government set limits." The experts also said, "this idea is not scientific, is cerebral seeds shoot out."

The expert said, "at the time of the steel industry is booming, ArcelorMittal is the biggest, earned a lot of money, everyone green with envy, followed bigger, but now read ArcelorMittal this corporate losses." The expert believes that "there is a rational scale iron and steel enterprises on the line", very high sensitivity to market needs, while large enterprises typically have "elephant turn" inefficiencies.

ArcelorMittal, the world's number one steelmaker, 2014 deficit to 1.08 billion dollars, have 3 losses in a row; net loss in the first quarter of this year is still on the rise, from $ 205 million to expand to 728 million dollars in the same period last year. The number-one steelmaker's current production capacity of 130 million tons, accounting for about 10% of world steel production.

As a "3~5 large iron and steel companies," the main negative, as well as fears of China's steel enterprises policy environment, there is one important reason is the limited resources at hand. The old leader said that "for the time being, some mergers benefit slightly better enterprise mergers and willingness or enthusiasm is not strong, the fundamental reason lies in their basic survival."

And they called for "market-led", in the view of the old leader, "meaning is actually down, now don't get this merger and reorganization."

First priority is to resolve the capacity

The senior expert said, "the merger and reorganization of the industry currently does not have a sudden change." Now's priority is to the production of iron and steel industry, this is a time to "slim down" process.

In the old leader's eyes, the "Thirteen-Five" period, the situation of overcapacity in steel industry cannot be fundamentally improved. "I think China wants to overcapacity within the 3-5 solution is impossible, which is a long period of excess. All developed countries, including the United States, Europe, Italy, and France, and Korea, and Japan, overcapacity has more than 20 years. "

The former leader also pointed out, "by 2020, which is to ' Thirteen-Five ' end when the excess steel production capacity reached their peak, more than it is now." Speed due to shrinking market demand exceeds the capacity of compression speed.

Above reasons from the first half of this year, operation can be seen in the steel industry. First half of 2015, China's crude steel output of 410 million tons, an (earlier) 1.3%, decreased for the first time in nearly 20 years. Meanwhile, in 2015, apparent consumption of crude steel in the first half fell 4.71%, which apparently exceeded the speed of decline in crude steel production. Wuhan iron and steel in Baosteel merger is no action, the former State Bureau of metallurgical old leader: don't get restructured

At present, in dissolving excess steel capacity in China mainly relies on "a group of four", that is going to resolve a number of, mergers and compression, inefficient compression, green cut.

However, this "four" effect, and benevolent. The old leader said, "go, mergers, corporate bosses, bosses are very cautious. Treatment of backward production capacity has almost, now is in violation of environmental protection capacity number, which can cut off ".

The old leader concluded that "ultimately rely on two measures, one is to rely on market forces, the second is on the environmental violation eliminated."

These senior experts have expressed similar views, "traditional industries such as steel, and let the market speak up, the Government tighten this valve, substandard production environment clean it out. Power of life and death over iron and steel enterprises mainly in the market and environmental protection are the two hands ".

In addition, the old leader also referred to the "limited production" means, he thinks that for now, it is reducing capacity, "the most effective way." Original Liu shijin, Deputy Director of development research center under the State Council have repeatedly appealed to the State Council, on excess traditional industries such as iron and steel, building materials, cement production, and studying what means, what proportion of production.

But there is no denying, limiting the production of another administrative means partisanship. The old leader also said contradictions: "this is indeed intervene with administration, Enterprise says you have just mentioned the market and now to administrative measures, it is difficult to get."

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