Great Wall erected against Mittal
Fearing an attack by the takeover tycoon, the Chinese government has firmed up a plan to consolidate its fragmented 350 million tonne steel industry into 10 big companies.
By TNN |
The dust may have settled on the Mittal-Arcelor deal. But the reverberations of the billion dollar takeover is felt even in the land of dragons.
Fearing an attack by the takeover tycoon, the Chinese government, last week, firmed up a plan to consolidate its fragmented 350 million tonne steel industry into 10 big companies with a 30% market share.
Around 100 million tonne is controlled by various companies with capacities as low as one lakh tonne. Bao Steel, the largest steel maker, has just 21 MT capacity compared to Arcelor-Mittal’s 130 MT.
The Chinese government’s plan envisages shutting down of 15 MT capacity in 2006 and 100 MT by 2010. It is also planning to cut export incentives from 11% to 8% by August in an effort to cut down domestic prices.
These steps, it believes, will make small steel units unviable, leaving them with no option, but a merger with bigger firms. India can learn a lesson or two from its northern neighbour on how to act decisively in crunch situations.
Fearing an attack by the takeover tycoon, the Chinese government, last week, firmed up a plan to consolidate its fragmented 350 million tonne steel industry into 10 big companies with a 30% market share.
Around 100 million tonne is controlled by various companies with capacities as low as one lakh tonne. Bao Steel, the largest steel maker, has just 21 MT capacity compared to Arcelor-Mittal’s 130 MT.
The Chinese government’s plan envisages shutting down of 15 MT capacity in 2006 and 100 MT by 2010. It is also planning to cut export incentives from 11% to 8% by August in an effort to cut down domestic prices.
These steps, it believes, will make small steel units unviable, leaving them with no option, but a merger with bigger firms. India can learn a lesson or two from its northern neighbour on how to act decisively in crunch situations.
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