Chinese Steel Firms Merge to Form Steel Giant

According to press reports two Chinese companies have merged to form the Chinese State-owned Shandong Iron and Steel Group Co. Ltd. The creation of the steel company came through the restructuring of Jinan Iron and Steel Group, the sixth largest steel company in China; and Laiwu Steel Group, the seventh largest steel maker in China.

Under the provincial steel industry plan, the newly formed company will have an annual output of around 31.6 million tons, second only to Baosteel. Further, the combined company would be the seventh largest steel producer in the world.

The merger of the firms follows a trend, called for by the Chinese government, to reduce the number of steel mills in the country, while strengthening the top producers. According to a Chinese report, by 2010 the government is looking to have crude steel output by of the top 10 producers in China to account for half of all the steel produced in the country; by 2010 that percentage is expected to increase to 70 percent.

At the present time the top ten steel producers in China have roughly 36 percent of the market.