Merger speculation rife in Asian steel sector

The Shanghai-based Baowu Steel Group Co., formed by the 2016 merger of Baosteel and Wuhan Iron and Steel, has reportedly signaled its intention to grow via acquisition. At the same time, investors are buying stock in India-based Bhushan Steel Ltd., based on speculation that it will be acquired by Luxembourg-based ArcelorMittal.

According to an online news item by Reuters, Baowu Steel President Ma Guoqiang indicated to that news organization via e-mail that the company intends to “actively participate” in merger and acquisition opportunities in a nation where the government is encouraging such activity.

Reuters, citing the Beijing-based magazine Caixin, lists Chongqing Iron & Steel Co. as one potential acquisition target for Baowu, which currently has about 70 million metric tons per year of steelmaking capacity.

Investors in India, meanwhile, have driven up the value of shares in New Delhi-based Bhushan Steel Ltd., based on interest expressed by ArcelorMittal to acquire it. According to an online news item by the Mumbai-based Economic Times, Bhushan Steel’s stock value climbed 20 percent on Monday, Oct. 23, 2017, based on the signal from ArcelorMittal.

The Economic Times describes Bhushan Steel as a holder of “distressed steel assets.” In its most recent financial quarter, the company’s sales were down by 10.6 percent compared with the previous quarter, and the company recorded a net loss.