Shenzhen Economic Daily reporter Chen Yanqing
After the merger of Baosteel and Wuhan Steel came out, Shougang shares, which had been rumored to integrate with River Steel, announced yesterday that it would stop planning major matters and closed down by the daily limit. Despite the collapse of the Shougang restructuring, the industry is widely expected to pick up speed. China wants to set up 10 steel groups by 2025 using bankruptcy, debt restructuring and mergers, foreign media reported yesterday. Industry insiders said that under the background of excess capacity and supply-side reform, it is imperative to accelerate mergers and restructuring in the steel industry, and they are optimistic about the investment opportunities brought by the reform.
Shougang shares resumed trading yesterday by the daily limit
On the evening of 28, the Shougang Group announced that the company disclosed on September 13 that its controlling shareholder Shougang Corporation was planning important matters about the company, and its shares were suspended from the opening of the market on September 13. At present, in view of the relevant conditions of this major matter is not mature, there is uncertainty, the company's controlling shareholder Shougang Corporation after careful consideration, decided to terminate the planning of this major matter. Affected by the news, yesterday Shougang shares opened by the daily limit, many times during the day to open the limit, but the closing was still sealed.
For the suspension, the outside world once speculated that the Shougang River Steel merger will start. Just before the Baosteel and Wuhan Steel restructuring plans were announced, there were rumors that China was considering the creation of Southern Iron and Steel Group and Northern Iron and Steel Group as an important step in the restructuring of state-owned enterprises in the steel industry. The Southern Iron and Steel Group will be formed by the merger of Baosteel Group and Wisco Group, while the Northern Iron and Steel Group will be formed by the merger of Shougang Group and Hegang Group.
A brokerage analyst, who declined to be named, said Shougang's suspension was not necessarily a restructuring with Hesteel. Shares in Hesteel, a listed unit of Hebei Iron and Steel Group, should have been suspended at the same time as Shougang if the two groups were planning a restructuring, but they were not.
Iron and steel industry restructuring is the general trend
The much-watched merger plan for Baosteel and Wuhan Steel was unveiled last week, sounding a clarion call for restructuring in the steel industry. Although Shougang shares restructuring failed, but the industry is widely expected to accelerate the steel industry restructuring. The industry expects that in the steel industry more difficult times, merger and reorganization resistance will be less.
On July 17, The General Office of the State Council issued the Guiding Opinions on Promoting the Structural Adjustment and restructuring of Central Enterprises, which explicitly included the steel industry in the "restructuring and integration group" of key work.
The restructuring of Baosteel and Wuhan Steel is a demonstration of China's steel industry, through which vicious competition will be avoided and market competitiveness improved, and also represents the future development trend of the industry, said Chi Jingdong, vice president of the China Iron and Steel Association, on Sept 19.
Market rumors before Angang shares and this steel plate will also be integrated. However, the two companies said in a statement late Monday that the two listed companies and their controlling shareholders are not aware of the restructuring of Anshan Steel and Bensteel, and the two companies said that there is no information that should be disclosed.
It is worth mentioning that yesterday, foreign media reported that China wants to use bankruptcy, debt restructuring and mergers strategy, by 2025, the establishment of 10 steel groups, producing 60 to 70 percent of the steel products, across the entire Chinese steel industry restructuring plan is to preserve and upgrade high-end coastal capacity, while cutting down low-end capacity in the mainland.
Wang Hetao, steel industry analyst at Changjiang Securities, said, "Although the Baowu merger has limited short-term effect, it is in line with the current trend of supply-side reform, reflects the country's determination to reform, and provides a model for the future development of the industry. Baowu later if the resumption of the market is still worth looking forward to, and is expected to further catalyze the current wheel market plate, driving other related themes in the industry stronger. He suggested paying attention to: 1. Maanshan Iron & Steel Co., LTD., located in the vanguard area of national reform; 2. Shougang, which benefits from the increase of the group's securitization rate; 3. He Steel, Xinxing Steel, Baosteel and Wuhan Steel, which are expected to merge; 4. Fangda Special Steel and Daye Special Steel with low valuation and performance safety pads; Five, low valuation, high elasticity of the target three steel, new steel.
The Shanghai Stock Exchange inquired about the merger of Baowu
The Shanghai Stock Exchange recently issued a letter of inquiry, the content of which mainly involves the details of the merger of Baosteel and Wuhan Steel, including the requirement to disclose the property rights of the parties sucked and the management of the situation.
It's worth noting that some foreign investors don't seem to like the deal. Standard & Poor's, one of the world's top three rating agencies, put Baosteel and its subsidiaries on negative credit watch on Sept. 23, with a view to downgrading the combined group and its subsidiaries by one or more notches in the future. Fitch Ratings, another major rating agency, also said the new group's financial indicators could be weaker after the restructuring because of Wisco's highly leveraged financial position.
