October 22, 2017 / 7:04 AM / a year ago

China's Baowu Steel says will consider other M&A opportunities

BEIJING (Reuters) - China’s top steel maker Baowu Steel Group Co, formed in a mega merger last year, will consider other merger and acquisition opportunities amid a government drive to consolidate the market and cut overcapacity.

“We will track and do research on M&A opportunities and actively participate in these opportunities as market player,” President of Baowu Steel Ma Guoqiang said in an email reply to Reuters on Sunday.

China’s steel producers will not expand their production capacities in the future but will aim to improve efficiency of the sector and pursue higher quality products, he said.

Baowu is seen as a potential bidder for loss-making Chongqing Iron & Steel Co (601005.SS), according to a report from Chinese business magazine Caixin On Oct. 2.

The top producer with more than 70 million tonnes in annual production capacity said it looks to improve production at its Baoshan plant, Qingshan plant, Meishan plant and Zhanjiang plant, Ma said.

Baowu Steel was formed by a merger between Baoshan Iron and Steel Group (Baosteel) and its smaller rival Wuhan Iron and Steel, which was formally completed in December last year.

China’s state planner repeated its pledge to continue to reduce overcapacity in the debt-ridden steel sector and promote mergers among them at a news briefing on Saturday.

The government is driving a major campaign to rationalize its sprawling state sector from steel to energy as it looks to reduce overcapacity and increase state control of key markets.

Reporting by Muyu Xu, Meng Meng and Josephine Mason; Editing by Jacqueline Wong

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