Chinese steel merger
Those who are worried about Chinese domination of world industry have yet another reason to fret. China's #2 steelmaker, Anshan Iron & steel Group, announced it will merge with a smaller Chinese rival, Benxi Iron & Steel. Together the two state-owned companies will cone close to surpassing #1 Chinese company in the field, Shanghai Baosteel.
According to a Wall Street Journal article (" Anshan Iron & Steel to Merge With Smaller Chinese Rival ", 3/14/2005 )
The deal comes amid a spate of mergers and buyouts across a range of industries, as Chinese companies try to gain economies of scale to compete more effectively with foreign rivals at home and abroad. The deal also reflects changes in the domestic and global steel industries that are starting to encourage consolidation.
What happened is that iron and coke suppliers j=have raised prices as demand has grown thanks to China's boom, and all steel companies are under pressure to expand as a counter to increasing concentration in those industries.
China, according to the WSJ story, is now the #1 steel producer, and it consumes 25% of the world's steel. The merger will give China the fifth and sizth largest steel comapneis worldwide.
This merger comes in the wake of the announcement by Dutch-based Mittal Steel, the world's largest, that it would buy about 37% of China's Hunan Valin Iron & Steel Group Co.
