The top ten steel companies in the future the average capacity or up to 50 million tons
On the 9th, the Shanxi Iron and Steel Industry Structure Adjustment Fund was established. This is the third related fund since the establishment of Siyuan Iron and Steel Industry Structure Adjustment Fund by Baowu Iron & Steel Co., Ltd. in 2017 and the first fund in this category initiated by private steel enterprises. Insiders said that with the improvement of the steel industry efficiency, to the production capacity into the final stage of the future reform of the steel industry will shift to the focus of leverage and mergers and acquisitions, in order to enhance the concentration of the steel industry.
Steel industry concentration needs to be improved
"Concentration is too low is the biggest problem the steel industry is facing." Allianz Metallurgical Chamber of Commerce, Beijing Jianlong Heavy Industries Group Co., Ltd. Chairman Zhang Zhixiang said that compared with developed countries, China's steel industry concentration is still low. Taking 2015 as an example, the top four Japanese steelmakers have a production capacity concentration as high as 83.3%, the top four US steelmakers have a production capacity concentration of 70%, and the top eight steelmakers in the EU have a production capacity concentration of 64.9% Steel production capacity accounted for only 34.2%.
The reorganization and merger among steel enterprises are being promoted, but the industry concentration in China's steel industry has not been significantly raised. In 2015, the concentration of China's steel industry has actually declined further. According to the statistics of the CISA, in 2015, the total output of the top four crude steel producers in the country accounted for 18.5% of the national total, down 0.1 percentage point from 2014; ranking Total output of the top ten enterprises accounted for 34.2% of the national total, down 0.8% from 2014.
Zhang Zhixiang said that at present, many domestic steel companies are small in scale, difficult to coordinate and have a very limited capacity to insure prices. In the event of a drop in aggregate demand, they are easy to wage price war and plunge into vicious competition. At the same time, due to the lack of small-scale enterprises, it will lead to insufficient innovation and development, energy-saving and environmental protection, affecting the sustainable development of enterprises and overloading of environmental and energy resources.
"Through the integration to improve industrial concentration, many problems can be resolved through consultation.Market behavior can be more rational, the market division of labor will be more clear, in the face of upstream and downstream enterprises and financial institutions will have greater bargaining space, more initiative. Zhang Zhixiang said.
Steel M & A funds to accelerate the establishment
In fact, under the trend of intensifying the merger and reorganization of steel enterprises in our country, the M & A funds started to exert force since 2017.
On the 9th, Shanxi SDIC, Shantui Group, MCC Jingcheng and Jianlong Group co-sponsored the establishment of the Shanxi Steel Industry Structure Adjustment Fund. It aims at using equity cooperation as a link and market-based operation as a means to promote the stock reorganization and specialized reorganization of steel and its upstream and downstream industries and provide operational efficiency and market competitiveness through technical and management innovation. It is reported that the structural adjustment fund is expected to total 50 billion yuan, the first phase of 50 billion yuan.
Zhang Zhixiang said that the establishment of the Shanxi Iron and Steel Industrial Structure Adjustment Fund was initiated by the establishment of Siyuan Iron and Steel Industry Structure Adjustment Fund by Baowu. After Hebei Iron and Steel Group initiated the establishment of the Great Wall River Steel Industry Development Fund, the third national steel industry structure adjustment fund, It is also the first steel industry structural adjustment fund jointly established by private-owned and state-owned enterprises.
Wang Jun Biao, chairman of Shanxi State-owned Capital Investment and Operation Co., Ltd., said that the structural adjustment fund will combine the distribution of state capital in steel and related industries, participate in the restructuring of local state-owned enterprises, stimulate the vitality of the market players, and participate in the supply-side structural reforms in Shanxi and other regions. Promote the upgrading of traditional industries and resource-based economy, revitalize the shell resources of listed companies.
On April 7, 2017, Baowu Group took the lead in setting up China's first investment fund focusing on the steel field - Siyuan Iron and Steel Industry Structure Adjustment Fund and planned to raise 40 billion yuan to 80 billion yuan.
Zhou Zhuping, chairman of Warburg Investment, said the steel industry fund will be in the downstream industry chain acquisition of claims or equity, and to gain control of the company focused on the same time, industry consolidation and mixed ownership investment. Through the improvement of corporate governance, optimization of asset structure and strengthening of team incentives, etc., the core value-added business of steel can be realized and eventually withdrawn through listing and sales to achieve revenue.
On July 28, 2017, China Great Wall Asset Management Co., Ltd. and River Steel Group Co., Ltd. formally established the Great Wall River Steel Industry Development Fund, which will center on the initial public offering, private placement, mergers and acquisitions, and transformation and upgrading of traditional industries in the reform of state-owned enterprises in Hebei Province , Investment in strategic emerging industries, international mergers and acquisitions and other projects through the capital operation, integration of relevant industry resources, service industry restructuring in Hebei Province.
Steel industry will welcome the integration tide
On the one hand, the state has proposed to achieve the goal of 60% concentration in the steel industry by 2025; on the other hand, increasing concentration also serves the needs of enterprises to grow bigger and stronger. The next five years will be the steel industry mergers and acquisitions a breakthrough in the crucial stage.
In September 2016, the State Council issued the Guiding Opinions on Promoting the Merger and Reorganization of Zombie Enterprises in the Iron and Steel Industry, stating that by 2025, the top ten Chinese steel industry enterprises will have 60% -70% concentration of production capacity, including 80 million tons Three to four steel-class groups, six to eighty thousand-ton steel groups, and some specialized steel groups.
Take Hebei Province as an example. By 2020, the number of steel enterprises in Hebei will be reduced from 109 to 60, creating a pattern of "2310" mergers and acquisitions. Forming a large-sized iron and steel enterprise group headed by Hegang and Shougang Group and forming three large-scale steel groups with private-owned steel enterprises in the regional market and ten private-owned steel enterprises with the advantages of special products. Shanxi Province also plans to reduce its mergers and acquisitions from the 27 steel companies in the past to 10.
Zhang Zhixiang believes that as the stage of industrial economic development changes, the era of heavy construction-based steel will eventually pass, and the structural contradictions between the steel varieties will further emerge. There will be a new imbalance in the variety structure. Therefore, the product structure will inevitably be adjusted, the supply-side structural reform is imperative.
Ma Guoqiang, Chairman of Baowu Group, said that with the progress of the capacity-to-production work, it will become very difficult to simply go production capacity. Merger and reorganization of enterprises will become an important path to resolve excess steel capacity and increase industrial concentration.
Take Beijing Jianlong for example, Shanxi Haixin Iron & Steel Group, whose previous acquisition and bankruptcy reorganization was renamed Shanxi Jianlong. As of the end of 2017, Shanxi Jianlong 5 million tons of complementary production capacity all resume production, annual profit of 1.63 billion yuan.
Zhang Zhixiang said it expects crude steel output in the steel industry to reach 870 million tons in 2017. To reach the target of 60% of industrial concentration, this means that the average output of the top ten steel enterprises will reach 50 million tons. Earlier, Zhang Zhixiang also revealed that Jianlong Group will strive to double its steel production capacity within five years, that is, by 2020, its steel production capacity will be increased from the existing 26 million tons to 50 million tons through mergers and reorganizations.
