China’s number-two steel maker, Angang, has merged with the fifth-largest, Bengang, to create a leader in the world’s top steel market, as Beijing struggles to overhaul a glutted sector and foster globally competitive firms.

The move could ultimately create a steel giant with an annual capacity for some 30 million tonnes — equivalent to South Korea’s Posco, the world’s fifth-ranked steel firm, or China’s current leader Baosteel Group, which controls listed Baoshan Iron and Steel Company, said a Reuters report.
The merger of the mills — which together employ as many as 160,000 in China’s northeastern rust-belt — marks a breakthrough after well over a year of difficult negotiations, as local governments fretted about layoffs and plant closures.
The marriage involved no equity or cash in the initial stage, though it might eventually. If it goes smoothly, it will set a precedent for consolidating China’s 800 steel mills, many of which have resisted Beijing’s call to merge or shut.
Anben Iron and Steel Group Company was born on August 8 by merging Anshan Iron and Steel Group and Benxi Iron and Steel Group. They control listed Angang New Steel Company and listed Bengang Steel Plates Company, respectively.
“Consolidation will help key Chinese companies, such as the new Anben Steel and Baosteel, enhance their ability to compete with world-class conglomerates such as POSCO,” said Liang Mingchao at Tianxiang Investment Consulting Company.
China’s first steel industry development blueprint, released last month, foresees two industry giants with an annual capacity of more than 30 million tonnes by 2010, suggesting Baosteel and the newly formed company might be frontrunners.
It calls for the country’s 10 largest mills to produce half of the nation’s steel output by 2010 and 70 percent by 2020