Two major steel makers of China, Baosteel and Magang, yesterday signed an agreement on strategic cooperation, marking a new step of restructuring the country's steel industry.
Shanghai Baosteel Group Corporation is China's largest and most highly modernized high-end steel plate producer, and its partner Magang (Group) Holding Co. Ltd based in Maanshan, Anhui Province, is the country's leading maker of hot and cold rolling thin strips, H-beam steel and high speed steel.
The two steel giants in east China agreed to strengthen cooperation in research and development, technological innovation, marketing, and purchase of raw material and fuel.
According to the agreement, the two steel makers will also increase information exchange and coordination on enterprise development planning to maintain healthy growth of the industry and market order in the region.
"Our alignment represents a significant endeavor of Chinese steel industry's seeking of cooperation," said Xie Qihua, board chairwoman of Baosteel.
She said that Chinese steel industry is facing challenge from both increasing global competition and internal production capacity surplus.
Steel makers in China are seeking measures to avoid repeated investment and inordinate competition caused by low concentration level and irrational geographical distribution of the industry, said Xie.
"It is under such a context that we decide to align," she said.
Gu Jianguo, general manager of Magang (Group) Holding Co., Ltd based in Maanshan, Anhui Province, said that the alignment is a major step in implementing the country's steel industry development policy, which requires to enhance the concentration level of the industry and boost its structure adjustment.
Chinese steel industry is witnessing rapid restructuring moves since it was hobbled by production capacity surplus last year after more than three years' robust growth.
Anshan Iron & Steel Group Corporation and Benxi Iron & Steel (Group) Co., Ltd, both in northeastern Liaoning Province, joined hands and established Anben Steel Group last August.
Shougang Group in Beijing made a blueprint early last year to relocate its steel factories in Tangshan, Hebei Province, and unite the local steel maker there.
Two other major steel makers, Wuhan Iron and Steel Group Corporation in central Hubei Province and Liuzhou Iron and Steel Group Corporation in southern Guangxi Zhuang Autonomous Region, set up a joint stock corporation last December.