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Chinese steel industry in great need of reorganization

The low degree of industry concentration has been a problem in Chinese steel industry for a long time. Mr Wu Xichun, Honorary President of China Iron and Steel Industry Association, said if the concentration of Chinese steel industry could achieve the level of that of automobile industry, the competitiveness of steel industry would greatly increase.

Mr Luo Bingsheng executive vice president of China Iron and Steel Industry Association said “The key to change this irrational industrial structure is to promote the consolidation and reorganization among steel enterprises. The promotion should be market-oriented and give full play to the market’s basic role in optimizing resources. And it should be on across the country with unified planning removing regional restrictions.”

Mr Luo added that “Furthermore large enterprises shall play a leading role in the restructuring and the government should also provide policy support.”

Statistics show that crude steel production of the top 10 steel mills accounted for only 43.5% of China total output in 2009 whereas car sales of the top 10 automobile companies accounted for 87% of total sales. Comparing to other countries, production of the top 4 steel mills in U.S.A accounted for 61% of total output and in Japan accounted for 75%.

Because of the low degree of industry concentration, there are many small steel mills which are unable to reach environmental and technical requirements. They not only caused threat to the environment but also disrupt the steel market order.

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