Baosteel and Wuhan Steel, two of the largest steel manufacturers in China, are set to restructure amidst international calls for Beijing to stop contributing to a global steel glut. Reuters reports:
On Sunday, the head of the country’s top economic planner said the government aims to cut 45 million tonnes of steel capacity and 280 million tonnes of coal production this year.
China’s Baoshan Iron and Steel Co Ltd and Wuhan Iron and Steel Co Ltd said in stock exchange filings that their parent companies are planning to restructure.
The details of the restructuring have not yet been finalised, and once they are settled the deal would still need regulatory approval, the companies said.
The firms also said they have each applied to halt trading of their shares as of June 27, and that they would issue an update after five trading days.
Last month, U.S. Steel obtained permission to seek a ban on Chinese steel imports on the grounds that Chinese subsidies amounted to anticompetitive behavior. Meanwhile, business leaders and unions in Europe have been pressuring politicians to stand up to China—while simultaneously trying to avoid their own overcapacity challenges.
China had been standing strong, making polite noises about reform but doing nothing. Concerns about unemployment and unrest seemed to outweigh worries about Western backlash. Something’s changed. Was Beijing feeling the heat? We’ll be watching to see if these restructurings are a sign of things to come.