SMM News: in recent years, the trend of merger and reorganization of China's iron and steel industry is gradually on the rise. In Hebei, Hegang Group has formed a production capacity of more than 44 million tons through the integration of iron and steel enterprises in the province. The private iron and steel enterprises in the province have also carried out layout adjustment inside and outside the province, and gradually formed eight iron and steel groups of 10 million tons to 30 million tons, such as Delong, vertical and horizontal, Jinxi, dedication, and so on, marking the arrival of the "era of large steel enterprises."
From a national point of view, the former Baosteel Group and the former WISCO Group have been jointly reorganized into China Baowu Group, becoming the largest iron and steel enterprise group in China, Jiangsu Shagang Group has reorganized the former Northeast Special Steel Group, and Jiangsu Shagang Group has reorganized the former Northeast Special Steel Group. Through a series of mergers and restructurings, Jianlong Group has rapidly expanded to more than 30 million tons of production capacity in Shanxi, Northeast China and other places, and Fujian Province has also arranged two more than 10 million tons of iron and steel groups. Fang Da Group merger and reorganization of 27 enterprises, the total assets of more than 70 billion yuan.
At present, this situation continues throughout the country.
The fifth wave of iron and steel mergers and acquisitions in the world is forming in China
The history of the development of the world iron and steel industry is the history of competition for the concentration of iron and steel production capacity to large groups of companies. In order to pursue larger economic effects, some large steel companies, especially multinational companies, spare no effort to make cross-border alliances to form larger steel giants through mergers and acquisitions. This is how ArcelorMittal became a global steel aircraft carrier.
Over the past 100 years, although the world iron and steel industry has experienced several major economic crises, each crisis has led to a new life and further development of the iron and steel industry. Two of these factors play a decisive role. First, technological upgrading has promoted industrial upgrading, and second, restructuring and mergers and acquisitions have increased the degree of industrial concentration.
Over the past 100 years, the global iron and steel industry has experienced five large-scale mergers and acquisitions, each of which has led to the concentration of production capacity to large enterprises and the formation of larger iron and steel enterprises. The first large-scale M & A wave occurred in the United States at the beginning of the 20th century, and at the same time, it also produced the first steel mill in the world-American Iron and Steel Company. The second took place in Japan in the 1970s, when the Japanese Ironabata and Fuji iron merged to form Nippon Steel. Since then, Nippon Steel has maintained its position as the first in Japan and the second in the world. The third was at the end of the 1990s and the beginning of this century, the wave of mergers and acquisitions in Europe, which created the world's largest steel group at that time. The fourth is the merger and reorganization led by Mittal across North America, Europe, Asia, South America and Africa since the beginning of this century. By 2005 Mittal had ranked first in the world, and by 2006 it had reorganized Arcelor, the second largest in the world. To become a global steel giant.
The above four large-scale restructuring has contributed to the continuous increase in the concentration of the global iron and steel industry, and the continuous optimization and upgrading of the iron and steel industry structure in the United States, Japan, South Korea, Europe and other countries and regions.
In China, the former Baosteel Group and the former WISCO Group merged into Baowu Iron and Steel Group, Hegang Group's transnational acquisition of Selvia Steel Plant, as well as the rise of restructuring and mergers and acquisitions of Shagang, Jianlong Group, Delong and other iron and steel groups. This means that the fifth wave of steel mergers and acquisitions in the world is taking shape in China.
It is imperative to improve the concentration of Iron and Steel Industry in China
Judging from the development trend of the world economy, whether industrial developed countries or newly industrialized countries, there are almost a number of pillar industries and dominant enterprises that support the whole national economy. It can be said that without pillar industries and advantageous enterprises, there will be no developed modern economy. It should be said that promoting the merger and reorganization of iron and steel enterprises and vigorously improving the concentration of China's iron and steel industry is not only related to the development of the iron and steel industry, but also related to the overall situation and the overall development of the national economy.
Large-scale enterprises, especially those with super-large size, high industrial concentration and large scale, are not only the trump card and main force of the industry, but also the guarantee of national economic strength and international competitiveness. If a large country does not have a large world-class group company, it will be difficult to gain a foothold in the development of the world economy; even a small country, if it has a world-class large enterprise group, can become a world economic power. For example, with the support of world-class companies such as Sony, Toyota and Nippon Steel, Japan has become a world economic power, and South Korea has entered the world because of Samsung, Posco and other top 500 enterprises in the world. In recent years, the course of world economic development has increasingly proved that the gap in economic development between countries and regions ultimately depends on the advantages of industries and large companies and groups. If we seize the "key minority" of superior industries and large groups of large companies, we will seize the big head of the national economy. Through the rolling development of these large companies and large enterprise groups, we can promote the economic development of related industries and regions, and invigorate the whole national economy.
From the situation of industry development, industrial concentration has become the "bottleneck" of the further development of China's iron and steel industry. At present, although the iron and steel industry has resolved a large number of excess capacity, but the contradiction of overcapacity still exists. The iron and steel industry has a low ability to regulate product prices and market excessive competition, and it is difficult to be in a dominant position in the international market competition. When the financial crisis comes, the ability to resist risks is low, all of which are directly related to the low concentration of the iron and steel industry.
High industrial concentration is a decisive factor to ensure the stability of the market and the balance between supply and demand. According to foreign experts, if the industrial concentration of the top four enterprises in a certain industry in a country is less than 40%, there will be excessive competition in the market, and the relationship between supply and demand and prices will fluctuate greatly. The low concentration of iron and steel industry in China is the fundamental reason for the excessive competition in the steel market and the price ups and downs many times in recent years.
In foreign countries, according to statistics, the steel output of the top four iron and steel enterprises in the United States accounts for about 65% of the total output of the whole country. The steel output of the top four iron and steel enterprises in Japan accounts for about 75% of the total national output, the steel output of the top four iron and steel enterprises in the European Union accounts for about 73% of the total output, and the steel output of the top two iron and steel enterprises in South Korea accounts for about 85% of the total output of the whole country. Among them, a steel output of Posco Iron and Steel Company accounts for 65% of the total output of the whole country. When the supply of steel production exceeds demand in these countries, the relationship between supply and demand can be basically balanced by effectively restricting production.
To improve the degree of industrial concentration is still the need of the development of iron and steel enterprises themselves. A well-structured industrial layout, especially a reasonable degree of industrial concentration, is a condition for the continuous innovation, full agglomeration, diffusion and sharing of technological elements. Improving the degree of industrial concentration is beneficial to the comprehensive management of environmental protection, the development of circular economy, the establishment of industrial specialization and cooperation system, and the extension of industrial chain. It is beneficial to optimize the allocation of resources and the coordination of production and management, to maximize the utilization rate of resources and the efficiency of enterprises, to vigorously adopt new technology and equipment, to realize the scientific management of enterprises, and to take the road of modernization of iron and steel industry directly. It is helpful to solve the long-standing problem of repeated construction, adjust and optimize the layout of production plant and market, and give full play to the effect of scale and overall planning.
Merger and reorganization is the most effective means to improve Industrial concentration
At a time when the state has made it clear that there can be no more production capacity, the iron and steel industry has reached the point where it is necessary to use the means of merger and reorganization to promote the adjustment of the industrial layout and structure. And then promote the new stage of enterprise environmental protection management, product structure, process technology and equipment comprehensive supporting structure and industrial layout adjustment.
In the iron and steel industry, the larger the general scale, the easier it is to bring about economies of scale, which can reduce the procurement and management costs of raw materials. In addition, the larger the scale, the greater the right of iron and steel enterprises to speak in the procurement and sale of raw materials, and even show a strong unified driving force in the international competition.
The development experience of the world steel industry tells us that excellence and strength must be based on the large scale of iron and steel enterprises. If the size of the enterprise does not go up, it will lose the premise of competing with large foreign companies. Especially for China's iron and steel enterprises, there is no certain scale, many economic and social problems are difficult to solve. In the face of economic risks, large economic entities also have greater resilience and more room for manoeuvre. The expansion and strength of iron and steel enterprises are interrelated. Only by making them bigger and stronger can they resist the winds and waves in the international market and gain an equal say with their competitors.
In this sense, iron and steel enterprises through merger and reorganization to expand the scale to improve industrial concentration is the general trend, imperative.
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