Year-on-year changes in China's yearly crude steel output from 2001 to 2008
In the second half of 2008, major medium and large sized steel mills in China struggled to come to terms with the rapidly decreasing steel prices as they continued to purchase iron ore according to the high-priced long-term contracts. In comparison, small and medium sized steel plants in China were not so badly hit as they were able to purchase raw materials at lower prices and maintained higher capacity use rates than the bigger mills. In this context, the share of major medium and large sized steel mills of total Chinese steel output declined in 2008 to 78.3 percent, lower than the 79.3 percent share in 2007.
In 2008, giant acquisitions and restructurings were witnessed in the domestic steel market, especially within the scope of the establishment of Hebei Iron and Steel Group. Such developments have impacted on the ranking of China's biggest domestic mills according to size.
Top 10 mills in 2008
Up to 2007, the yearly crude steel output of any Chinese steel group had not exceeded 30 million mt. However, with the acquisition of Shaoguan Iron and Steel Group and Guangzhou Iron and Steel Group by Baosteel, as well as the amalgamation of Tangshan Steel, Handan Steel, Wuyang Steel, Xuanhua Steel and Chengde Steel, China now has two steel groups whose yearly outputs surpass 30 million mt.
In 2007, Hualing Iron and Steel Group ranked tenth, with a total crude steel output of 11.1234 million mt; however, Baotou Steel is tenth placed in 2008, even with a steel output of less than 10 million mt. The main reason is that many plants with capacities in excess of 10 million mt have been acquired or restructured, and so have been excluded from the list.
In 2008, total crude steel output of the top ten steel mills amounted to 213.374 million mt, accounting for 42.6 percent in the nation's total, up 5.8 percent as compared to 2007.
The outputs of the top ten steel mills in 2007 had all increased by 4.57-26.93 percent: however, 2008 shows a different picture: among the top ten mills, five have reported output increases of 1.8-11.2 percent, while the other five have witnessed output decreases of 0.6-20.9 percent. In particular, Shougang Steel's output decrease was mainly due to the market sluggishness during the Olympic Games.
In 2008, China's yearly crude steel output broke through the barrier of 500 million mt, while the expansion of mills was also witnessed. Although China's steel production capacity continues to expand, given the competition from import materials it will be difficult for China's domestic mills to effectively achieve further capacity expansion. In the coming years, Chinese steel industry is expected to maintain its trend of mergers and acquisitions, while the yearly crude steel output is likely to settle in the range of 450-500 million mt.