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What is the future of consolidation in China's steel industry?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
China has long sought to accelerate the integration of its steel industry, aiming to combat overcapacity, promote modernisation, and enhance its bargaining power when purchasing iron ore. China had previously set some quantitative goals for steel industry concentration, though these proved challenging and were never achieved. The “Guiding Opinions on Promoting High-Quality Development of the Steel Industry” is a blueprint for China’s steel sector’s development and structure within the 14th Five-Year Plan, as announced in 2022. This guidance encourages leading companies to carry out consolidations to build several world-class super-large steel enterprise groups, with a particular focus on efficiency as well as scale. We believe that industry consolidation will accelerate over the next five to ten years due to policy support, the contraction of Chinese steel demand, and overcapacity within the steel sector.
Table of contents
- Executive summary
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Why is there a need to consolidate?
- Steel consumption per capita will decline
- The process of reducing excess capacity will promote consolidation
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The difficult road to consolidation
- 1. Before 2004 – an absence of policy and wild growth
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SOEs and non-SOEs will collaborate more on future acquisitions
- SOEs play a significant role in M&As
- Before 2015, M&As were more regional, but from 2016, cross-regional M&As dominated the market
- Conclusion
Tables and charts
This report includes the following images and tables:
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The four stages of the Chinese steel industry: market concentration has fluctuated significantly over the past 20 yearsUrbanisation rate vs apparent steel use (ASU) per capita in the US, Japan and China (1970-2021)The process of capacity reduction will promote the consolidation of enterprises
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Summary of significant policies for mergers and acquisitions in the steel industry from 2005 to presentThe types of M&A cases in the steel industryThe proportion of all mergers and acquisitions led by SOEs exceeds 50%After 2015, the ratio of M&As led by private enterprises reached 50%Geographical distribution of the six major steel groupsThe history of mergers and acquisitions of the Baowu GroupThe history of mergers and acquisitions of the Jianlong GroupComparison of M&A approaches between SOEs and non-SOEs
What's included
This report contains:
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