Steel industry to face unprecedented bankruptcy, M&A tide

BEIJING, Dec. 17 (Xinhua) — China is mulling over more efficient measures to eliminate excess capacities in the steel, electrolytic aluminum, cement and shipbuilding industries, making those industries face an unprecedented tide of bankruptcy, mergers and acquisitions.

The National Development and Reform Commission(NDRC) and the Ministry of Industry and Information Technology are making policies on the issue based on proactive long-term investigations, the Economic Information Daily quoted an unnamed source as saying.

Apart from controlling the launch of new projects and punishing those unapproved ones, the government will raise the industry thresholds in terms of energy consumption, environmental protection examinations, bank credit and an accountability system, to make the fittest survive.

The central government will also take local investment and employment into consideration when creating the withdrawal mechanism for excess capacities.

As Chinese economy transforms from an investment-pulled growth to an innovation, science and technology-driven one, the basic industries such as steel must adjust with it, said Xu Xiangchun, head of the information department of MySteel.

Currently, Chinese demand for steel is approaching the ceiling. As the economic restructuring further drags down steel demand and banks stop lending money to the sector, it is expected more and more steel mills will face a capital chain rupture, Xu added. Enditem

Editor Xuefei Chen Axelsson

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