Beijing News Shell Financial News (Reporter Zhu Yueyi) The merger and reorganization of the steel industry has accelerated again. New Steel Co., Ltd. (600782. SH) announced on April 24 that Jiangxi State-owned Capital Operation Holding Group Co., Ltd. ("Jiangxi State Holdings"), which holds 100% of the shares of Xinyu Iron and Steel Group Co., Ltd. ("Xinsteel Group"), the Company's controlling shareholder, signed a transfer agreement with China Baowu Iron and Steel Group Co., Ltd. ("China Baowu"), under which Jiangxi State Holdings will transfer its 51% stake in Xingang Group to China Baowu free of charge.

Xingang said that after the completion of the transfer, China Baowu will indirectly control 44.81% of the shares of the listed company through SISCO Group and realize control over the company, and the actual controller of the listed company will be changed from the State-owned Assets Supervision and Administration Commission of Jiangxi Province to the State-owned Assets Supervision and Administration Commission of the State Council.

SISCO Group is an industrial backbone enterprise in Jiangxi Province. The Beijing News shell financial reporter learned that the production capacity of Xingang Group reached 10 million tons, with 98 directly subordinate and participating holding enterprises, and the output of steel in 2021 exceeded 10 million tons.

"The merger and reorganization of the steel industry is continuing to advance, on the one hand, there is a guiding role of policies, on the other hand, after entering the mature period, merger and reorganization is an inevitable trend of industry development and spontaneous market behavior of enterprises." On April 25, Wang Jing, a researcher at Lange Steel Research Center, told Shell Financial Reporter that China's per capita crude steel consumption has reached the level of per capita crude steel consumption in developed countries in the past, and industry reduction is imperative, and the National Development and Reform Commission proposed to continue to reduce crude steel production in 2022, and the current and future years will still be the window period of integration and restructuring.

As the world's largest steel company, China Baowu has been undergoing mergers and acquisitions in recent years, and is still promoting the strategic restructuring of Shangang Group.

In addition to large state-owned enterprises, private enterprises have also appeared frequently in the wave of mergers and acquisitions in the steel industry.

In late March, Jiangxi Western Iron and Steel Group Co., Ltd. ("Fangda Steel"), a subsidiary of Liaoning Fangda Group, announced its intention to participate in the equity auction of Anyang Iron and Steel Group Co., Ltd. ("Angang Group"). Another large private steel company, Shagang Group, has also expressed interest in participating in the mixed reform of Angang Group, but there has been no progress since then.

Wang Jing told Shell Financial Reporter that with the advancement of capacity integration, the increase in the concentration of the steel industry is a definite trend. The reduction in the number of enterprises can optimize the competition structure of the industry, reduce disorderly competition, help to stabilize market price fluctuations to a certain extent, and promote steel price stability. The integration of tail enterprises is also conducive to focusing on subdivided fields, improving bargaining power between upstream and downstream, weakening the cyclicality of the industry, and promoting the stability of industry and corporate profits.