Steel Company Chongqing Takeover, Baosteel to Decide

Shareholders and creditors of Chongqing Iron and Steel Corp (CISC) at the beginning of 2018 agreed to make a deal to cut the firm’s debts from 20 billion yuan to 3.5 billion yuan. And also, they will transfer unprofitable assets to the local government.

Then finally, CISC became profitable again in 2018 following some years of losses. In the interim report this year, it highlighted the intervention of Baowu Iron and Steel Group or Baosteel as the main reason for the turnaround.

Baosteel is the second-largest steelmaker in the world. And by the end of the year, it will make a decision on whether it will take over Chongqing Steel or not.

Moreover, the firm expects to benefit from a state plan to put about 60% of overall capacity in the palm of its top 10 producers. And this was up from around 40% now. Also, they are currently discussing the plan to take over the smaller Magang Group.

Aside from that, executives indicated that the upturn in CISC’s fortunes came while the improvement in the steel market took place. Also, prices recovered by state efforts to shut down low-grade polluting mills. And now, they aim to secure the company’s health even in times of downturns.

Relocation of the Steel Company

Before reviving in 2018, Chongqing Steel needed to move 60 miles north from an inner-city site to the rural district of Changzhou. And its new management blamed this 2006 government decision for the firm’s plight.

Aside from that, the relocation itself cost 37.6 billion yuan. This gave duties to CISC annual interest payments of over 1 billion yuan. Then, not meeting the local demand for the cold-rolled steel used by auto home appliance manufacturers did not make any help too.

And the year 2015 was maybe the worst for the steel market in China.

But now, the steel market further improves in the market.