As of 30 Apr 2008, 29 publicly listed steel companies had released their 2007 Annual Report. In 2007, these 29 companies manufactured 183.85 million tonnes of steel. It is expected that they will manufacture 213.29 million tonnes of steel in 2008, up 16% YOY. Of these 29 steel companies, 13 companies are expected to have over 10% increases in steel production, and another 15 lower than 10% increases. Only Beijing-based Shougang Group made negative growth in steel production as the company was relocated due to the upcoming Beijing Olympics. The top three steel manufacturers, Baoshan Iron & Steel Co. Ltd (600019), Wuhan Iron and Steel Company Limited (600005) and Angang Steel Company Limited (000898) are expected to see a 11.79% increase in their production in 2008, advancing from 51.75 million tonnes in 2007 to 57.85 million tonnes in 2008. In addition, eight steel makers are expected to reach an annual production capacity of over 10 million tonnes.

Medium-sized steel makers will also see expansion of their production capacities, ranging from more than 20% growth to 300% growth. Such expansions could be ascribed to their acquisition of assets from their parent companies and the operation of new projects following technological upgrades. Meanwhile, due to reorganisation, some medium-sized steel companies will see relatively little change in production capacity. Lingyuan Iron & Steel Co. Ltd (600231) expects its steel production will only increase by 3.26% in 2008 to 2.31 million tonnes from 2.24 million tonnes in 2007. Beijing Shougang Co. Ltd (000959), due to its relocation for the Beijing Olympics, expects its production will fall by 20.7% to 3.94 million tonnes in 2008, as the company manufactured 4.97 million tonnes in 2007.

Analysts of the steel industry commented that the annual reports of steel companies showed the overall growth of the industry in 2007. Thanks to production growth, a steel price hike and a reduction of effective taxation, it is expected that the steel sector would have 20%-30 % growth in 2008.


Source: China Securities Journal

Date: 5 May 2008

CN01/JC/KM/WH