China encourages mergers of steel makers

China will encourage mergers in the iron and steel industry, said Minister of Industry and Information Technology Li Yizhong here on Friday, aiming to offset the adverse impact of the global financial turmoil.



The industry was one of the hardest-hit sectors amid the deteriorative economic crisis.



There are still nearly 1,000 iron and steel producers in China, most of which are small. In a move of making the industry rationalize for some time, the government will encourage large domestic steel producers to buy smaller ones.

The steel output is respected to reach 480 million or 490 million tonnes in 2008, against total capacity of 600 million tonnes, Li estimated.



The government will extend financing on favorable terms to help the steel industry upgrade its technology, said Li.

China's steel sector has experienced tough times amid the international financial and economic crisis. Steel prices have slumped by nearly half in recent months and there are no signs of recovery.



Li also said that China should have a say in iron ore pricing, adding that Chinese steel makers should work together to avoid pushing up iron ore prices in international negotiations.

 

(Source:en.sxcoal.com)