the Steel Industry has Entered a Period of Cross-border Mergers

Recently, the world's two largest steel companies, Mittal and Arcelor, simultaneously announced that the two parties have reached an agreement on Mittal's improved merger proposal and will jointly form a global company called "Arcelor-Mittal". The new overlord of the steel industry. The new company's annual output is as high as 120 million tons, accounting for about 10% of the world's steel industry. With a production advantage of more than twice, it leaves behind Japan's Nippon Steel Corporation.

The merger of Arcelor and Mittal will have a major impact on the global steel industry. At present, the Chinese steel market has been integrated into the international steel market. The competition in the steel industry is the competition of international steel companies. Therefore, the growth and strength of other international steel companies means that Chinese steel companies will become smaller, weaker and weaker. Relative decline in competitive position.

The combination, merger and asset reorganization of steel companies is a major trend in the development of the world's steel industry, and it is also the central link and breakthrough point in the structural adjustment of the steel industry. Over the past 100 years, the global steel industry has experienced three large-scale reorganizations, establishing the strong steel positions of the United States, Japan, and Europe respectively. From a global perspective, domestic mergers and acquisitions of steel companies in major developed countries and regions have basically been realized and are moving towards cross-border mergers and acquisitions.

At present, the concentration of China's steel industry is low. If steel companies do not speed up their own integration, they are likely to become targets of mergers and acquisitions by multinational companies. Mittal's acquisition of Arcelor will require China's steel industry to accelerate the pace of restructuring and mergers.

Compared with developed countries, China's steel industry concentration is relatively low. The low industrial concentration has led to many problems, which are prominently reflected in the following aspects: first, the steel product structure is unreasonable, product quality is low, and steel production has high energy consumption, high pollution, and low efficiency; second, China's steel industry is relatively Low concentration increases the volatility of the steel industry; in addition, low concentration also weakens the steel industry's negotiating power as a buyer when purchasing required raw materials, energy and other resources.

It can be seen that low industrial concentration is the main problem of China's steel industry at present. This problem has seriously affected the healthy development of China's steel industry and also reduced the international competitiveness of China's steel.

The reorganization within the steel industry can not only supplement and adjust the assets and corresponding production capabilities among enterprises, but also reduce unit production costs. At the same time, unit operating costs will also be reduced due to the adjustment of the original dispersed marketing network and management personnel. Optimized combinations can be achieved over a larger range while decreasing. Through reorganization, after the scale of steel enterprises is expanded, the management and technical advantages accumulated by advantageous enterprises can be radiated to the integrated enterprises, allowing enterprises to organize specialized division of labor and technology research and development of production lines on a wider platform.