New Steel Giant in China
July 1, 2008
June 30 – China’s largest steel maker came into being on Monday as two leading companies formally merged in the northern province of Hebei, which encircles Beijing.
“The group will produce 50 million tonnes of iron and steel annually by the end of 2009,” said Wang Yifang, board chairman of the new steel giant.
Hebei is the country’s largest steel and iron ore producer. In 2007, Tangshan Iron & Steel produced 22.75 million tonnes of iron and steel while Handan Iron & Steel had an output of 8.33 million tonnes.
China is the world’s largest steel producer and consumer.
Source: Shanghai Daily
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China’s Environ Policy May Fuel Steel Price Rise
June 29, 2008
STEEL prices could rise even higher after soaring 55 per cent in the last two months, due to China’s strict environmental protection policy during the Olympics.
According to Tai Hean Leng, Malaysia Steel Works (KL) Bhd (Masteel) managing director,”
“Beijing is waging war against pollution on nearby steel mills that is causing grey skies. When the supply of steel into the global market comes down, prices will go up.”
Hebei is a major steel-making province in China, accounting for 20 per cent of the country’s 489 million tonnes of crude steel output last year.
Another factor in the rising steel prices is that China is reducing freight movement around Beijing.
“When exports of heavy metal is being diverted to ports in the south like Lianyungang, logistics costs will go up, thereby adding to steel bar prices,” Tai said.
In April, steel bars sold locally cost between RM2,278 per tonne and RM2,419 per tonne. Following the liberalisation of the market on May 12, prices have increased to between RM3,550 per tonne and RM3,750 per tonne.
Meanwhile, Tai declined to disclose revenue and net profit forecasts for 2008.
“We have invested RM90 million in capacity expansion in the last two years. We are now leveraging on economies of scale because of better global demand and rising prices,” he said.
Masteel has capacity to produce 450,000 tonnes of billets and 350,000 tonnes of steel bars per year. Seventy-five per cent of its steel products are for the domestic market and the rest for exports.
Source: New Straits Times
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Abramovich Bids for Chinese Steel Maker
February 21, 2008
Russia’s Evraz Group said yesterday it wants to buy a Singapore-listed Chinese steel maker for as much as US$1.5 billion to expand in the world’s largest market.
Evraz has agreed to buy a 10-percent stake of Delong Holdings Ltd at S$3.9459 (US$2.80) per share, with conditional options to raise the stake to 51 percent. Delong shares were suspended from trading yesterday morning and gained 16 percent to S$3.50 after the announcement.
A 51-percent ownership will require Evraz to make a general offer to buy the remaining shares at the same price, under Singapore takeover codes.
The maximum consideration payable by Evraz will be about US$1.494 billion, assuming full acceptance of the mandatory offer and the exercise of all outstanding warrants, Evraz said. Partly owned by Russian billionaire and Chelsea soccer club owner Roman Abramovich, Evraz has been expanding to Africa and the United States in recent years.
“The investment by Evraz in the Chinese steel sector, our first in the Asia Pacific region, is a critical strategic move to expand our global footprint,” said Evraz’s Chairman and CEO Alexander Frolov.
Delong, headquartered in Beijing, has its production base in nearby Hebei Province, which is close to raw material sources and an extensive client base within the Bohai Economic Circle.
Evraz said it doesn’t intend to change Delong’s management following completion of the transactions.
The deal is subject to anti-trust clearance by China’s Ministry of Commerce and the State Administration of Industry and Commerce.
China’s industry policy bars foreign majority ownership in its state-owned steel producers, but the rules are unclear for privately-owned and overseas-listed mills.
Evraz is buying the initial 10-percent stake from Best Decade and Best Decade shareholders, and has a call option lasting for six months to buy a further 32.08 percent from Best Decade. It added Best Decade shareholders had agreed to sell another 8.97 percent in Delong later.
Delong Chairman Ding Liguo, who owns a majority stake in Best Decade, said the potential combination with Evraz will provide “critical elements” to grow the business, including secure access to raw materials and substantial financial resources, and creating new opportunities to share technology, research and development.
Source: Shanghai Daily
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