New Rules Aimed at Consolidating Steel Industry: 80% of Companies to Go

The Ministry of Industry and Information Technology issued draft rules that will limit market access to China's iron and steel industry on December 9. The draft regulations state that in order to get a permit allowing a company to continue to be engaged in the steel industry, ordinary steel makers' crude steel output must have surpassed at least 1 million tons in 2008. Similarly, steel makers engaged in the production of "special steel products" are required to have produced at least 500,000 tons in 2008. Steel makers who don't meet the threshold will be ordered to withdraw from the industry. An analyst said "of the country's approximately 400 steel companies, only 80 meet the industrial access requirements as outlined in the draft rules, this effectively means some 80% of Chinese steel companies will be eliminated from the industry."

Source
Securities Daily

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