China's highly fragmented steel industry is poised for a major programme of consolidation that will create a strong top 10 players in the world's largest market for the metal, steel magnate Lakshmi Mittal has predicted.
Mittal, Chairman and Chief Executive of ArcelorMittal, the world's largest steel company and the wealthiest man in Europe, made the forecast in an interview to a newspaper.
"On a global basis, the steel industry is well consolidated, except in China," he said and added that we will see China's steel industry also consolidated. There are thousands of steel companies in China producing anything from 50,000 to 5 million tons a year.
"China wants to have the top 10 companies producing 50 percent 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 35 percent in two Chinese steel companies but is currently not permitted to take majority control of local production. 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.”
He added that 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.

Chinese iron ore producer China Tian Yuan Mining Ltd aims to raise between US$400-500 million from a Hong Kong initial public share offering, sources close to the deal said.
Tian Yuan, which kicked off pre-marketing for the IPO, planned to issue 600 million new shares or 30 percent of its enlarged share capital, according to the company's term sheet.
The proceeds of the offer will be used to expand mining and processing capacity, pay resources fees and exploration expenses at Yanjiazhuang mine, the term sheet said.
Tian Yuan, which will kick off a formal marketing road show on April 28 is set to price its deal on May 11, with a trading debut scheduled for May 19. Citigroup is the sole bookrunner of the deal, while CLSA is co-lead manager.

January 2010, has totally shipped out 24,000 tons of seamless steel pipes to US down by 76.32 percent YoY. The total export volume in the first two months this year stood at 30,800 tonnes slumping by 81.88 percent YoY.
The Department of Commerce decided to set the final antidumping duties ranging from 29.94 percent to 99.14 percent on more than US$1 billion of Chinese exported steel pipes in one of the biggest US trade cases on record recently which would impact domestic oil pipe manufacturers a lot. And more than half of the pipe makers in China were on the production reduction in the whole February.
As per report, China has accumulated to yield out 3.26 million tons of seamless steel pipes in the first two months of this year up by 9 percent YoY accounting for 2.78 percent of the total steel output. It can be seen that China production of seamless steel pipes showed obvious signs of reduction during the same period.

The long-term benchmark pricing system for iron ore benefits both steel mills and their ore suppliers, He Wenbo, Chairman of one of China's top two steel makers, Baosteel said.
"We hope the miners will consider long-term interests and protect the development of both the upstream and downstream parts of the industry," he said during a meeting to discuss the company's annual results in 2009.
Two of the dominant global iron ore suppliers -- BHP Billiton of Australia and Brazil's Vale have already confirmed they intend to abandon the annual benchmark pricing system and switch to a more flexible and market-oriented quarterly mechanism.
Chinese government officials have remained opposed to any change, but Xu Lejiang, the Chairman of Baosteel's state-owned parent, the Baoshan Iron and Steel Group suggested that the old system was ready for an overhaul.
Xu said the system, which allows major iron ore customers to buy at a discount if they sign up to long-term contracts with major miners, was no longer suitable either for the steel mills themselves or for suppliers, and that it would be 'reasonable' to make adjustments.
Baosteel announced earlier that Xu would resign from the board of the listed company, but he would remain group Chairman.
Corporation Chairman He Wenbo said a big rise in iron ore prices was a 'fact' given the tight supplies this year, but the company should be able to cope.
"If steel demand holds out and current prices remain steady, Baosteel's performance will still improve over last year even with rising iron ore costs," he said.
He also noted that while steel demand was likely to rise significantly in 2010, China already had sufficient capacity to deal with the increase.

According to the cooperation agreement between China and Brazil, Wisco plans to build a new steel mill in Acu port of Rio de Janeiro with an investment of US$50 billion which is China's largest investment in Brazil and biggest steel project overseas.
The steel mill would be built by Wisco and Eike Batista's LLX Logistica where Wisco will hold 70 percent shares of this mill. The mil is expected to start production officially in three years.