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Steel firms should go abroad

Date:2013-12-25 Views:0 Author: Zhao Qian Source:Global Times

China will encourage Chinese steel enterprises suffering from overcapacity to transfer their businesses to overseas markets where the steel market is still very big, a top official was quoted in a statement published on the website of the Ministry of Land and Resources Tuesday.

"The global steel industry is developing unevenly with some regions like Southeast Asia and Africa still having a big space to develop, and some nations such as China confronting overcapacity," said Miao Changxing, deputy director of the industrial policy division of the Ministry of Industry and Information Technology (MIIT).

Miao suggested that the Chinese enterprises push forward development of the steel industry in Central Asia, Southeast Asia and Africa through ways such as supporting these regions' infrastructure construction, setting up joint venture enterprises and distribution centers overseas.

"For the Chinese steel companies, there will be big business opportunities in emerging markets such as some countries in Southeast Asia," Wang Guoqing, a senior analyst with Beijing Lange Steel Information Research Center, told the Global Times Tuesday.

Leading Chinese steel enterprises have already entered into foreign markets. Baosteel Howa Trading Co under Baosteel Co, China's leading iron and steel complex, and South Korean GNS Co signed a foreign investment introduction memorandum in April 2012, to invest and build a new steel processing and distribution center in South Korea's Gyeonggi Province.

Wuhan Iron and Steel Co, China's largest flat-rolled alloy steel producer, announced in April this year that it will set up a joint venture with an India-based energy company, and also invest in an India-based silicon steel processing and delivery center, according to a Reuters report.

"Expanding our businesses overseas has become one of the development strategies for our company," Sun Jin, director of the publicity office at Wuhan Iron and Steel, told the Global Times Tuesday.

To meet the environmental protection standards set up by the foreign countries, only Chinese companies with high technological capabilities and strong capital strength could enter into the foreign markets, said Wang of Lange Steel.

Meanwhile those domestic companies with backward technological levels will be shut down or consolidated according to the central government's measures of combating steel overcapacity, Wang noted.

Miao from the MIIT also said that the Chinese government will raise the standards for pollutant emission and energy consumption for the steel industry, and severely punish those companies which violate the environmental protection law, so as to eliminate the backward production capacity.

The growth of China's total output of crude steel in November slowed down, with the growth rate declining by 9.5 percentage points to 4.2 percent year-on-year, official data showed Tuesday.