Shandong Pilots Restructuring Program to Safeguard Teetering Steel Industry11-06 20:45 Caijing
Local government of east China's Shandong province has unveiled plans to restructure steel industry which is struggling with excess capability and low prices in a pilot program.
According to the plan announced last Thursday, the government will create an "oversized" steel group, as well as five regional conglomerates in cities of Zibo, Weifang, Laiwu, Linyi and Binzhou by the year 2015.
It also targets total steel production in the province at no more than 50 million tonnes three years later as it pushes companies to cut excess capacity to return to profitability.
The plan came after the local provincial government released in October a proposal to close obsolete steelmaking capacity. Government authorities including top economic planner and the ministry of finance are working together with policies to restructure major sectors like steel, auto, cement, and rare earths, the official Economic Information Daily reported on late October. It cited officials as saying that the next two years marks a critical period to push forward with the restructuring.
The local government will invest as much as 130 billion yuan to build two steel bases in coastal cities, according to the Securities Times.
Chinese steel makers reported giant loses in the third quarter, with Angang Steel posting a loss of 1.2 billion yuan, down 640 percent and Sangang Minguang reporting a net profit slump of 204.45 percent in the three months year-on-year.
Other steel makers, including Hebei Iron and Steel and Daye Special Steel, also reported declining performance, citing falling steel prices and weaker demand in the months.
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