China's steel industry poised for further consolidation
China's highly fragmented steel industry is poised for a major programme of consolidation that will create a strong top 10 of players in the world's largest market for the metal, the steel magnate Lakshmi Mittal has predicted.
Mr Mittal, chairman and chief executive of ArcelorMittal, the world's largest steel company, and the wealthiest man in Europe, makes the forecast today in an interview with The Sunday Telegraph.
"On a global basis, the steel industry is well consolidated, except in China," he says. "I hope we will see China's steel industry also consolidated. "There are thousands of steel companies in China, producing anything from 50,000 to 5m tonnes a year.
"China wants to have the top 10 companies producing 50pc of China's volumes. I hope that will happen soon because it will create a system for the steel industry. But they don't allow foreign companies to hold majority shares yet."
ArcelorMittal is a minority shareholder with stakes of less than 35pc in two Chinese steel companies but is currently not permitted to take majority control of local production. Mr Mittal believes the rules could be relaxed after Chinese steel industry consolidation. However, he is concerned about a rising tide of protectionism around the world and by spiralling prices of iron ore and coal.
"In this crisis, countries are becoming more protectionist," he says. "But protectionism is arising not just from a trade point of view. It arises because everyone wants to see fair play.
"There are countries providing incentives and subsidies; there are weak currencies; there are regulations on the climate change and carbon dioxide emissions. All this unfair play creates uncompetitiveness," he said.
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