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Steel merger draft rules completePublished: 01 Jul 2009 08:02:01 PSTA production line at Dongbei Special Steel Group in Dalian, Northeast China’s Liaoning Province. Photo: CFPBy Tu Lei Draft guidelines for mergers in China’s steel industry have been completed with the aim to cut oversupply and improve resource distribution, according to the Ministry of Industry and Information Technology (MIIT).Chen Yanhai, head of the raw material department at MIIT, said that the guidelines would facilitate and encourage mergers of steel producers, according to a report in the Beijing Times yesterday.“The guidelines are aiming to wash out the outdated production ability and encourage more mergers,” Chen was quoted as saying at a meeting on curbing the oversupply of the steel industry, held in Beijing Monday.The meeting was attended by nine medium and large-sized steel producers including Baoshan Iron and Steel (Baosteel) and Wuhan Iron and Steel.The announcement of the draft guidelines follows both domestic and global trends to maximize efficiency in the steel industry.Last month vice-minister of MIIT Yang Xueshan said that the nation was drafting regulations to enhance the development of super-sized steel groups to realize a better distribution of resources.In May, the National Development and Reform Commission outlined the fostering of several steel giants each with an annual production capacity of over 50 million tons by 2011.“Mergers are a development trend internationally,” Luo Bingsheng, executive vice chairman and secretary general of China Iron and Steel Association (CISA), was quoted by the China Business Times as saying.On Friday, three subsidiaries under Hebei Iron and Steel Group merged via a share swap. Tangshan Iron and Steel (Tangsteel) acquired Handan Iron and Steel and Chengde Xinxin Vanadium and Titanium.The proposed transaction, if approved by the industry regulator, will put Tangsteel into the forefront of producers with an estimated annual output in excess of 30 million tons, challenging Baosteel’s No. 1 spot.Hebei Iron and Steel Group stated that the deal would further concentrate the business of listed companies and promote a synergistic effect.Analysts said that the encouraged mergers would help to relieve the imbalance in the market at the moment.“The merger will be good for cutting production oversupply,” Zhou Xizeng, a steel analyst from CITIC Securities, told the Global Times yesterday.Zhou said that merged steel producers could better plan production, benefiting both producers and the nation.He also warned that the realization of maximizing benefits of merged companies would be a new challenge for producers.In the first five months of the year, China’s output reached 217.2 million tons of crude steel, according to the World Steel Association.May’s output hit 14.46 million tons, up 7 percent from April.MIIT stated in May that a total of 470 million tons was enough to maintain a balanced supply and demand for the whole year.Total capacity stood at a surplus of 25 to 30 percent in May compared with actual demand, MIIT said.According to a CISA report in the same month, the top 50 companies with increased production this year were mostly small and medium-sized steel makers with less than 5 million tons of production ability.The nine leading enterprises including Baosteel and Wuhan Steel cut production by 15 to 40 percent in the first five months, but the new projects of smaller enterprises pushed production capacity, CISA stated. Explore the World, Understand China!Please log on http://www.gloaltimes.cn万馬券 薬剤師 求人 カード 現金化 クーポン 电话会议 即日 融資 木托盘 テレクラ