The cross-regional and cross-ownership merger and reorganization of the steel industry will further accelerate and upgrade.

　　On February 7, the Ministry of Industry and Information Technology and other three departments issued the "Guiding Opinions on Promoting the High-Quality Development of the Iron and Steel Industry" (hereinafter referred to as the "Opinions"), which clearly encourages leading enterprises in the industry to implement mergers and reorganizations and build a number of world-class super-large iron and steel enterprise groups.

　　The "14th Five-Year" Raw Material Industry Development Plan released recently also clearly pointed out that during the 14th Five-Year Plan period, the production capacity of crude steel, cement and other key raw materials and bulk products will only decrease but not increase, and the industrial concentration in key areas will be further improved, forming 5-10%. A leading enterprise in the industrial chain with ecological leadership and core competitiveness.

　　Li Xinchuang, chief engineer of the Metallurgical Industry Planning and Research Institute, said that the concentration of the domestic steel industry is still less than 40%. In the past two years, Baowu Group has been reorganized and broken. Jianlong Heavy Industry, Delong Iron and Steel, Shagang Group, and CITIC Special Steel (22.740, - 0.40, -1.73%) and other iron and steel groups are in the ascendant, and my country's iron and steel industry has now ushered in an important window period and a historical opportunity period for mergers and acquisitions.

Under the background that the output of the steel industry has entered the peak platform area, it is the key to the healthy and high-quality development of the industry to increase the strength of steel mergers and acquisitions and improve the industry concentration.

　　Cross-regional and cross-ownership mergers and acquisitions

　　Wang Guoqing, director of Lange Steel Research Center, told China Business News that in the future, the merger and reorganization model between the steel industries will continue to change, the effect of the reorganization will be more prominent, and the overall industrial concentration of the industry will be effectively improved.

　　Merger and reorganization is one of the key tasks of the steel industry this year.

Chen Derong, chairman of China Iron and Steel Association and chairman of China Baowu, said that my country's steel industry has broken the "small and scattered" situation. Both state-owned steel companies and private steel companies are promoting mergers and reorganizations. The steel industry is on the rise, and the concentration of the steel industry will further increase.

　　Peng Huagang, Secretary-General of the State-owned Assets Supervision and Administration Commission, clearly stated at a press conference of the State Council Information Office in January this year that the restructuring and integration of steel and other fields will be steadily promoted this year, and new central enterprise groups will be established in a timely manner in related fields.

　　The "Opinions" made specific arrangements for the merger and reorganization of the steel industry.

The "Opinions" pointed out that relying on the dominant enterprises in the industry, one or two professional pilot enterprises should be cultivated in the fields of stainless steel, special steel, seamless steel pipe, and cast pipe.

Encourage iron and steel enterprises to merge and reorganize across regions and ownerships, change the "small and scattered" situation of the iron and steel industry in some areas, and enhance the endogenous power of enterprise development.

Orderly guide independent hot rolling and independent coking enterprises in Beijing-Tianjin-Hebei and surrounding areas to participate in the merger and reorganization of iron and steel enterprises.

　　Wang Guoqing told Yicai that in the high-quality development guidance released this time, the original industrial concentration data target will be cancelled, so that the merger and reorganization of the steel industry will develop more benignly and healthily. Encourage iron and steel enterprises to merge and reorganize across regions and ownerships, change the "small and scattered" situation of the iron and steel industry in some regions, enhance the endogenous power of enterprise development through mergers and reorganizations, and use synergies to promote the realization of leapfrog development of reorganized enterprises.

　　The "Opinions" mentioned that policy support for production capacity replacement will be given to enterprises that have completed substantial mergers and acquisitions in the construction of smelting projects.

Encourage financial institutions to actively provide comprehensive financial services to iron and steel enterprises that implement mergers and reorganizations, layout adjustments, and transformation and upgrading in accordance with the principles of risk controllability and business sustainability.

　　Wang Guoqing analyzed that the iron and steel industry is an important basic industry in the national economy. The merger and reorganization of iron and steel enterprises is conducive to improving the concentration, and the improvement of the concentration is conducive to the optimization of the industry structure and the regulation of the market circulation order, and the second is conducive to the improvement of the concentration. The control of the total production capacity of the industry is conducive to reducing the carbon emissions of the industry through economies of scale.

Therefore, the iron and steel industry is bound to speed up the transformation and upgrading, speed up the pace of mergers and acquisitions, eliminate outdated iron and steel enterprises that do not meet environmental protection standards, vigorously develop the circular economy, and promote the comprehensive development of the iron and steel industry.

　　Concentration of the steel industry continues to increase

　　In recent years, under the dual promotion of supply-side structural reform and state-owned enterprise reform, the merger and reorganization of the iron and steel industry has continued to advance, and the industrial concentration has also been increasing.

At present, under the background of "carbon peaking and carbon neutrality", traditional iron and steel enterprises are facing greater challenges. Restructuring and integration can concentrate resources and achieve complementary advantages, which will help enterprises to become bigger and stronger.

　　On September 19, 2016, the State Council issued the "Guiding Opinions on Promoting the Merger, Reorganization and Disposal of Zombie Enterprises in the Iron and Steel Industry", which is a top-level design plan for the iron and steel industry to resolve excess capacity and optimize and adjust its structure.

The above guidance makes it clear that by 2025, 60% to 70% of the output of China's steel industry will be concentrated in about 10 large groups, including 3 to 4 80 million-ton steel groups and 40 million-ton steel groups. There are 6 to 8 steel groups and some specialized steel groups.

　　Around this general goal, the merger and reorganization of the iron and steel industry will be divided into three steps: the first step is to reduce production capacity by 2018, and the clearing will be clear.

At the same time, it will demonstrate the next merger and reorganization, such as the merger and reorganization of Baosteel and Wuhan Iron and Steel.

The second step is to improve the merger and reorganization policy from 2018 to 2020.

The third step is to promote the merger and reorganization of the steel industry on a large scale from 2020 to 2025.

　　Since 2021, the merger and reorganization of the steel industry has accelerated significantly.

Anshan Iron and Steel reorganized Benxi Iron and Steel to become the second largest steel group in China and the third largest in the world, further promoting the formation of a new industrial development pattern; Baowu reorganized Kunshan Iron and Steel and signed an agreement with Shandong SASAC to reorganize Shandong Iron and Steel Group. After the reorganization, Baowu's production capacity scale It is expected to reach 150 million tons; Shagang's mixed-ownership reform of Anyang Huacheng and other 5 enterprises; Puyang Steel's restructuring of Xinggang, and so on.

　　At the same time, the level of the steel industry chain and supply chain has been further improved.

CITIC Special Steel has strengthened cooperation with upstream and downstream enterprises to enhance the overall competitive advantage of the industrial chain; JISCO has accelerated the construction of a modern industrial system through a series of measures such as coordination to stabilize the chain, project extension, technological strengthening, and investment and supplementary chain.

　　Data released by the China Iron and Steel Association shows that the pace of mergers and reorganizations of my country's iron and steel enterprises has accelerated, which has promoted the further improvement of industrial concentration.

At the end of 2021, the steel output of the top 10 and top 20 enterprises in my country's steel production accounted for 40.39% and 54.85% of the national steel output, respectively, an increase of 2.99 and 3.26 percentage points over the same period of the previous year.

Author: Zhu Yanran