A bird's-eye view of Benxi Steel Corp in Northeast China's Liaoning Province.

Anben Iron and Steel Group (ABIS), set up through the merge of the two biggest iron and steel enterprises in northeast China, was inaugurated in Shenyang, capital of Liaoning Province Tuesday.

The merge of Anshan Iron and Steel Group Corporation and Benxi Iron-Steel (Group) Limited Liability Corporation constitutes a significant event in the growth of China's steel and iron industry, said Li Keqiang, secretary of the Liaoning Provincial Committee of the Communist Party of China (CPC) at the ceremony.

It is good to improve the concentration level of China's iron and steel industry and to promote its sustainable development, he said.

The establishment of the ABIS is only a tiny section of the on-going combination and reorganization move of China's iron and steel enterprises.

According to the policy concerning the development of China's iron and steel industry released in July,China endeavors to promote the acquisition, combination or reorganization move of trans-regional iron and steel enterprises.

By 2010, accoring to the policy, China is expected to have one or two iron and steel groups with a combined annual capacity of over 30 million tons and several large enterprises of tens of millions-ton production capacity.

Except the merge of the Anshan and Benxi iron and steel corporations in northeast China, there are other reorganization projects under planning such as the merge of the Capital Iron and Steel Company and the Tangshan Iron and Steel Company in north China, the acquisition move of Baoshan Iron and Steel Company in east and south China and the reorganization process of the Wuhan Iron and Steel Company in central-south and southwest China, said Luo Bingsheng, vice president of China National Iron and Steel Association (CISA).

Luo said some new changes are emerging in China's iron and steel industry such as the widening gap between enterprises in profits and competitive strength, which is yet to be transformed.

CISA statistics noted that in the first half of this year, 68 large and medium enterprises reported 49.233 billion yuan (6.1 billion US dollars) of profits with the top ten earning profits of 33.582 billion yuan (4.1 billion US dollars), accounting for 68 percent of the total profits volume.

It shows that the profits of China's iron and steel industry is further shifting to big and advantageous enterprises, acknowledged Luo.

"As the lower concentration level is hindering the growth of China's iron and steel industry, to promote merge and reorganization of trans-regional enterprises has become a top issue of the industry," he said.

This trend has been noticed by the international iron and steel circle.

A report recently issued by U.S.-based World Steel Dynamics (WSD) said that China's iron and steel industry is in a transitional period, which is expected to see large amount of integration activities within the industry.

The report predicts that when this turn of integration is completed by 2010, international iron and steel enterprises boasting annual production capacity of 40 to 50 million tons will emerge in China.

China's iron and steel industry is playing an increasing vital role in the international market with more and more Chinese iron and steel enterprises entering the list of world competitive iron and steel giants, said Peter Marcus, analyst with the WSD.

Both state-owned large iron and steel enterprises and both on the list of the top ten iron and steel giants of the country, the Anshan and Benxi Iron and Steel corp. is equipped with the world advanced technology and facilities and are major panel producers of China.

The new iron and steel group will perform unified management to the development strategy, technological innovation, product research and development and marketing strategy of member enterprises.

The group aims to become a world super iron and steel group with an annual production capacity of over 30 million tons by 2010, said the articles of the newly established group.

Source: Xinhua