China Announces Steel Industry Development Plan.

Consolidation of the industry and preventive action against foreign investors acquiring control in Chinese steel mills are the cornerstones of the plan. Only companies with 10 mln mt steel or 1 mln mt of high-alloy steel will be allowed to buy shares in Chinese producers. The plan envisages diminishing export of products with low value added ? pig iron, coke, scrap ? all good news for Ukrainian steel and coke producers. No authorization will be given for the introduction of new capacities in the industry, while the total number of companies will be significantly reduced from more than 800 currently. By 2010, two industry giants will be created in China, with annual capacities of 30 mln mt each. The government expects to see a significant overall reduction in production costs (currently, we place China at N8 position out of 9 major steel production regions in the world). If the plan works out, stable long-term growth in the global steel industry will be enabled, while Ukrainian producers will see a stronger competition, especially in the segment of products with low value added.