Baowu Company takes leading positions in the local and world markets
Chinese metallurgical group Baowu has acquired Taiyuan Iron & Steel (TISCO), which is the second largest producer of stainless steel in the country. The amount of the deal was $2.1 billion.
The owner of Baowu is the state corporation Assets Supervision and Administration Commission, which is engaged in asset management. The Metallurgical Company now disposes of 51% of TISCO shares, which produces about 12.9 million tons of steel per year, of which 4.5 million tons are stainless steel.
Due to absorption, Baowu will increase its production capacity up to 11 million tons per year, now it is about 98.5 million tons.
Baowu is considered the largest steel company and is the second largest in the world, the leadership belongs to ArcelorMittal. It was founded in 2016 by merging two corporations – Baosteel and Wuhan Iron & Steel. In the list of Fortune Global 500 takes 111th place, a total of 12 metallurgical enterprises, 7 of which are from China.
At the beginning of the year Baowu became the leader of the Fortune rating, which evaluates the activities of steel companies. For the first time in its history, the Chinese manufacturer was able to reach an income of 79.9 billion dollars. This figure is the highest among enterprises in the metallurgical industry.
Baowu plans to further expand its production by taking over other companies. The goal is to take a large share of the domestic steelmaking market. The state program of industry development contributes to the company’s growth. According to it, by 2025 about 60-70% of steel production capacities are planned to be concentrated in the assets of 10 large corporations.
According to the results of 2019, there are about 500 metallurgical companies in China, which smelted 808 million tons of steel in total. Of these, the share of 10 large enterprises is about 36%.
China is one of the leaders in the steel production segment. To achieve such results, the country has been actively developing the industry for 40 years. A huge number of factories were built, state subsidies, loans with low interest rates and various tax benefits were provided.
The peak of metallurgical industry growth in China occurred in 2011-2015, when the growth of exports from the country contributed to the reduction of prices for raw materials in the world market. This was the reason for the reduction of a large number of enterprises in different countries, which could not compete with Chinese products. Then, many steelmakers asked the EU to introduce measures to prevent dumping by China. The U.S. also regulated imports and introduced special duties on Chinese steel products to this end.