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The steel industry in China faces tremendous pressure to consolidate

China’s steel industry is facing a shakeout as the government pushes for mergers and production reduction with the aim of ending chronic overstock. However, given the slow pace of the effort to eliminate excess capacity, issues are anticipated to persist.

In order to increase its production volume by roughly 10%, Ansteel Group Corporation, the third-largest steelmaker in the world by crude steel production, would purchase Lingyuan Iron and Steel Group, a midsize steelmaker in Chaoyang, Liaoning province.

The headquarters of the Ansteel Group are in Anshan, a city in northeastern China. As its major stakeholder, Ansteel Group will have authority over Lingyuan Iron. The shares will be purchased from the state-owned asset supervision and administration authority in Chaoyang.

Early in June, the purchase was approved by Beijing’s State Administration for Market Regulation following anti-monopoly and other screening procedures. The deal is thought to be in its final stages, although it is unknown when it will be finalised.

In recent years, Ansteel Group has been acquiring rival companies. In order to nearly double its production volume, it purchased a 51% equity position in Ben Gang Group in Benxi, Liaoning, in October 2021. According to the World Steel Association, the deal elevated Ansteel Group to the third-largest producer of crude steel from seventh.

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