Steelmakers get ready to go global
By Yin Ping (China Daily)Updated: 2006-11-03 09:03
The recent announcement of Indian Tata Steel's bid for larger European rival Corus Steel is another good example, Sowar said.
Tata is a low-cost producer and has rich iron ore, while Corus is advanced in R&D and is 10 times the size of Tata.
"The Tata-Corus takeover is a prudent move and a very good example for prospective Chinese buyers," Sowar said.
As to whether better internal consolidation will add to China's negotiating power in the price of iron ore, Sowar said he did not think there would be a direct impact.
"The world's three iron ore producers dominate 75 per cent of global supply, so it will be difficult to influence them," he said.
But he believed a consolidated Chinese steel industry would make the iron ore price more stable.
Internal consolidation would also remove China's inefficient capacity and lower its demand for iron ore, he said.
Sowar's optimism contrasts with the view of many insiders who think China is dragging its heels consolidating the steel industry.
A senior official, who declined to be identified, said at a steel conference yesterday that the consolidation process had not gone as smoothly as expected.
In 2004, China's top 10 steelmakers accounted for 34.7 per cent of the domestic market.
The ratio dipped in 2005 to around 33 per cent, despite government efforts to lift it.
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