China Iron & Steel Industry restructuring: "three-step" or the formation of the Group of Ten
REVIEW: 2025 more than 60% production is likely to focus on ten groups, walking three steps to this end will facilitate the restructuring of the steel industry, and following the "treasure Wu" restructuring, substantial restructuring "saddle" also will be put on the agenda in the year.
Baosteel and Wuhan Iron and Steel restructuring is opened a prelude.
September 20, the two companies were announced, the major asset restructuring plan proposed for the initial transaction Baosteel Wuhan Iron and Steel to issue A shares of convertible shares of all shareholders, convertible merger Wuhan Steel shares, which, Baosteel is the merging parties cum subsisting party, Wuhan Steel shares of the merged party-cum-party non-existence, is not expected to lead to the final change in corporate control, it will not constitute a backdoor listing.
Following Baosteel, Wuhan Iron and Steel restructuring, China is planning a much larger steel industry restructuring chess game.
Overcapacity backdrop, brings "chaos scattered small weak" status of China's iron and steel enterprises increasingly exposed to vicious competition and other issues, industry consolidation is imminent.
September 19, at the China International Economic and Exchange Center hosted the "resolve excess capacity and Way Out" as the theme of "economic monthly to talk about", the vice president of the China Iron and Steel Industry Association, said the late Jingdong, the State Council will systematically advance steel industry to carry out large-scale mergers and acquisitions.
By 2025 more than 60% production is likely to focus on ten groups, walking three steps to this end will facilitate the restructuring of the steel industry, and following the "treasure Wu" restructuring, substantial restructuring "saddle" will also be in During the year it was put on the agenda.
"Saddle" the reorganization on the agenda
China Exim Bank Chairman and former President Li Ruogu recently submitted a steel industry overcapacity material toward the center, in his view, in the back of overcapacity, a major problem facing the steel industry is fragmented.
"Dispersion is a very big problem, according to Ministry statistics, our iron and steel enterprises with more than 300, an average of a province 10, the world is not capacity so decentralized health if any and steel related enterprises, add up to more than 2000 home, capacity dispersion very serious. "Li Ruogu said.
One consequence is that the dispersion of iron and steel enterprises generally vicious competition. Trans Union Chamber of Commerce small and medium metallurgical enterprises former honorary president Zhao Xizi told 21st Century Business Herald reporter, in recent years, the iron and steel large losses the biggest reason is the vicious competition between industries. Despite the recent price rebound, but the pattern of the main Chinese steel market does not change, the vicious inter-industry competition will not be eliminated, productivity is difficult to advance.
It is worth noting that the process of merger and reorganization of the steel industry has burst on the scene sign.
Concern Baosteel, Wuhan Iron and two steel restructuring plan has been submitted to the central rate of the State Council SASAC. China is expected to be born a total assets of over 700 billion yuan, annual output will reach 60 million tons, the scale of China ranked first, second in the world's steel, "Big Mac."
Vice president of the China Iron and Steel Association Chi Jingdong, said Baosteel and Wuhan Iron and Steel with the Department of the Yangtze River basin, the market is relatively concentrated, the factors of production conditions are relatively similar, not very different grades, after the mergers and acquisitions market competitiveness available increased dramatically.
"For example, silicon steel, Wuhan Iron and Steel production of the year when, at the most scarce one ton sold 40,000 yuan. After Baosteel developed, the price is now down to less than 10,000 yuan / ton. If the reorganization, the two vicious competition does not exist." He said.
Chi Jingdong, said Baosteel and Wuhan Iron and Steel industry in terms of mergers and acquisitions is a revelation, the future development of the steel industry mergers and acquisitions will be oriented direction, but not so blind expansion as in the past.
"The next merger and reorganization of the object, is the saddle of the country-driven mergers and acquisitions, will soon study, may be announced by the end. Now, the state-driven restructuring, Baosteel, Wuhan Iron and Steel is the first one, the next one is saddle this. "Chi Jingdong said, following the" treasure Wu, "and" further restructuring of the saddle, "the State Department has been put on the agenda.
However, Anshan Iron and Steel Group, Minister of Planning and Development Ministry Jia Qichao in response to 21st Century Business Herald reporter, said confirmation, but also get the news from the media, they are not specific in the enterprise planning, enterprise does not advance the action.
As early as 2005, Anshan and Benxi Iron and Steel restructuring has been jointly set up the saddle of the Group, but over the years the two companies in addition to the listed share statistical data and initial results, basically stagnant substantive restructuring, personnel changes and the integration of assets is not touch.
SASAC Research Center, Hu later in an interview with 21st Century Business Herald reporter, said, Anshan and Benxi facing complex restructuring ownership and responsibilities vested in the relationship resulting.
"Angang belong to the central level, Benxi, Liaoning Province, belonging to state-owned enterprises, its restructuring both inter-regional and inter-owners, since the interests of both sides constantly entangled, and passing the buck duty, plus factories, historical issues and other large group placement of workers can not be resolved, the twists and turns after just set up a loose saddle of the Group. "he said.
Hu Chi said Baosteel and Wuhan Iron and Steel restructuring more smoothly because both the central level, are grouped together SASAC supervision, belonging to the same owner within the framework of restructuring, part of the business but also overlap, and thus easier to operate, but the saddle recombinant much more complicated. Consolidation and restructuring of the central enterprises are mainly state-owned enterprises from the entire main level, to achieve. How to achieve regional, inter-owner of mergers and acquisitions has always been a problem to be solved.
"Three-step" formation of the Group of Ten
"In the past do a lot of mergers and acquisitions is local, this may have to systematically promote mergers and acquisitions." Chi Jingdong, said Baosteel and Wuhan Iron and Steel is the first step of the merger and reorganization of the steel industry mergers and acquisitions exemplary.
He said the State Department is promoting a national level, the steel industry mergers and acquisitions, disposal of zombie companies a series of actions, and publish the corresponding guidance.
Chi Jingdong said that this round of restructuring goal is that by 2025, China's steel industry, 60% -70% of the steel production gathered inside the large group of around ten.
"The large group is basically 3-4 eighty million tons of steel group stage, 6-8 4-million-ton steel groups as well as some professional groups, such as seamless steel pipe, stainless steel and other products will form some professional group. "
"(Above) guidance tube decades, in three steps, the first step in 2018, Step 2020, Step 2025, the three-step clearly different requirements, mergers and acquisitions will become final the main line of the future development of the steel industry. "Chi Jingdong, said around this overall objective, has been preliminarily identified the" three-step "road map.
The first step is 2016 --2018, the capacity to go to the Lord, and make mergers and acquisitions demonstration.
Chi Jingdong said that this stage of production is to make long-term development impact of overcapacity in the steel industry, energy clearing, "is not simply excessive, including ineffective, has been discontinued, and the possibility of future recovery, the clearing of all to clearing, 2018 in order to focus on. "
Zhao Xizi said the increase in market concentration of the steel industry is the steel industry for many years the same issue. However, due to overcapacity, most steel prices burdened the joint reorganization of steel enterprises lack power, but in practice, some of the restructuring or even a 1 + 1 is less than 2 lose-lose situation.
He believes that to enhance the capacity of the steel industry concentration provided a rare opportunity. To the capacity to "downsizing" as the basis, 30-500000 tons of steel production capacity of small enterprises possible merger or overall death, and only on this basis, the consolidation and reorganization will be possible.
Step 2018 Year - 2020, this stage will improve the policy on mergers and acquisitions, the lifting of some of the policies of the steel enterprises mergers and acquisitions constraints.
"From the beginning of the year 2018 can not say that these policies imperfect, but some policies may not leave time, which is mainly concentrated in 2018 - 2020, to perfect around mergers and acquisitions policy," said Chi Jingdong.
An NDRC official told the 21st Century Business Herald reporter, is studying relevant policies to support financing, asset management companies involved in bankruptcy or exit the debts of the business, while optimizing the mergers and acquisitions market environment, such as the merger subject to the "three minus two free" tax incentives and appropriate financing policy, so as to enhance the body's willingness to mergers and acquisitions.
The third step is promoting large-scale stage, time is the 2020 Year - 2025. In fact, the Minister of Industry and Miao Wei stressed on many occasions, will focus on promoting the next period of time overcapacity in industrial restructuring, elimination of zombie companies, will actively promote the process of breaking, strategic mergers and acquisitions, foster a number of core competencies strong enterprise groups.
Undoubtedly, steel is the main battlefield of large-scale mergers and acquisitions. Thus, in late Jingdong, the future of each steel companies when thinking about their own development, we must think about "who I am and restructuring, reorganization of who I am and I whom optimization, optimization who told me," not as in the past , obsessed with "the two blast furnaces, two converters."