China's largest steel merger plan exposed

Yesterday, the reporter received confirmation from relevant departments of two large steel enterprises in Shandong Province - Jinan Iron and Steel Group and Laiwu Iron and Steel Group. Under the guidance of relevant departments in the province, the two steel enterprises have planned to merge into a super large steel group with a capacity of 30 million tons. However, the one-year merger negotiations between Baosteel Group, the largest domestic steel manufacturer, and Jinan Iron and Steel Group have come to an unhappy end.

Experts from the China Iron and Steel Association have analyzed that there has always been dislocation competition in the steel products of Jigang and Laigang. If the merger is successful, the two steel companies may break through the bottleneck of regional industrial carrying capacity and become the second 'Baosteel Group' in China

After the merger, it is second only to Baosteel

At present, it is difficult to say whether the merger of the two steel companies is driven by the local government or achieved through capital market operations. Yesterday, a relevant person from Jigang Group told reporters that the integration plan between the two steel companies is already under consideration. But what can be confirmed is that if Jigang and Laigang successfully merge, their steel product production capacity will exceed that of the currently ranked second in the country, Wuhan Iron and Steel Group, and only differ from the largest domestic steel manufacturer Baosteel Group by about 2 million tons of production capacity

Experts from the China Iron and Steel Industry Association believe that the cooperation between Jigang and Laigang will give New Steel Group stronger steel pricing power. "At the same time, integration will strengthen the company's research and development capabilities, which is conducive to the launch of new products and the improvement of technology

According to relevant information, the steel production of Jigang Group currently ranks sixth in the country, with a production of 10.42 million tons; Laigang Group's steel production ranks seventh in the country, with a production of 10.34 million tons. Baosteel Group, the largest steel manufacturer in China, has a steel production of 22.73 million tons. It is reported that Laigang Group is the largest H-beam production enterprise in China.

New Steel Group wants to seize the coastal advantage

According to a representative from the Comprehensive Office of Laigang Group, according to the corresponding national policy planning, a 30 million ton super large steel enterprise will become the development trend of China's steel enterprises in the future. However, at present, Laigang Group has limitations in both production scale and infrastructure construction. At the same time, relevant personnel from Jigang Group stated that steel companies in the province are interested in developing in coastal areas, so that the new steel group can occupy more favorable and advantageous coastal resources.

According to experts from the China Iron and Steel Association, currently, the steel transportation capacity, water sources, and energy in Shandong Province are all facing problems. Especially for large steel enterprises like Jigang Group and Laigang Group, whose production scale is in the tens of millions of tons, the market's carrying capacity for the steel industry has almost reached its limit

Integrating Jigang Group and Laigang Group and developing them along the coast will help increase the concentration of the steel industry, while also having advantages in energy conservation and reducing logistics costs