China’s Two Major Steel Makers Launch Joint Venture in North China

---

Researched by Industrial Info Resources (Sugar Land, Texas). BAOSTEEL Group, China’s largest steelmaker, and rival Handan Iron and Steel Group, China’s eleventh largest steel firm, agreed to build a $2.52 billion joint venture steel plant. The 4.6 million ton plant will produce high added-value steel products like automotive steel and thin sheets used in consumer appliances, as well as hot-roll plates, cold-roll plates and coated plates, said Chen Zhanjun, a spokesman for Handan.

There is a shortage of these products in China, and sales from the new plant could surpass 60% of Handan Steel's total when construction is finished in 2010. According Chen Jinren, a Huatai security analyst, "Handan Steel has to seek some strategic partners to join hands for such a plant which requires a higher technology standard." A partnership with Baosteel could also help Handan Steel benefit from Baosteel's marketing channels for auto sheets, analysts said. Baosteel Group may take up to 50% of the project, after originally seeking a greater share, reported China Business News.

The project, near Handan’s existing mills in Hebei, is one of the few large projects to be approved in the last two years since the government issued a blueprint that sought to control rapid expansion in the nation’s steel industry.

The new Handan project is also Shanghai-based Baosteel's second cross-region investment this year after it bought control of Xinjiang Bayi Iron & Steel Company at the end of April in northwest China’s Xinjiang Uygur Autonomous Region. Trans-regional consolidation is vital to Baosteel’s goal of becoming one of the top the steel makers in the world and being listed among the top 200 of the Forbes 500.

Baosteel expects to nearly double its crude steel production to 50 million tons a year by 2012. Before 2010, the company plans to achieve its crude steel production of 30 million tons and stainless steel production of 1.85 million tons, said Zhang Bianbo, General Manager of the number one raw materials department at Baoshan Iron and Steel Company, Limited.

Industrial Info Resources (IIR) provides marketing communication services ranging from industrial database solutions to market forecasting, custom analytics, and specialty promotions that support high-level image campaigns.