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China opens steel to full foreign ownership

31 March 2015

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31 March 2015

China opens steel to full foreign ownership

Report summary

China will open its steel and base metals sectors to full foreign ownership from 10 April. While the policy change raises the likelihood of increased M&A activity, it won't be a stampede as China's steel and metals industries are oversupplied, operating margins are poor and uncertainty over the country's new environment law remains.

Executive summary
Steel ownership restriction to be lifted
Appetite for investment in China's steel sector
- Foreign companies with interests in Chinese steel companies
Increased M&A expected but the pace will be slow
- Ratios of share price-to-book value (P/B) of selected steel companies
- Downstream steel joint ventures between foreign and domestic companies
- Net profit margin of Chinese key steel enterprises
Foreign investment: an opportunity to upgrade China's steel industry?