ASIA The silk curtain is slowly closing on foreign investment

Jul 01, 2007 | 07:19 AM |

CHINA Of all the steel producers to have emerged from China on the back of the country's incredible economic boom, Baotou Iron & Steel (Group) Co. Ltd. is likely to be one of the least familiar.

The company is a mid-ranking mill that until a couple of years ago was perhaps best known as one of China's top producers of rail. But Baotou Iron & Steel has grown rapidly in recent years, adding more than 2 million tonnes of crude steel output since 2005, although that is nothing spectacular in the context of the massive growth in Chinese output.

The relatively obscure mill has attracted the attention of two of the world's most important steel producers, Mittal Steel Co. NV, Rotterdam, and Shanghai Baosteel Group Corp., Shanghai, China, and has come to symbolize some of the noteworthy changes that are taking place in China.

Before it became the dominant global producer with its takeover of Luxembourg-based Arcelor SA, Mittal Steel entered into talks with Baotou Iron & Steel to buy a 49-percent stake in the Chinese company's listed arm. The talks came to nothing, with Baotou Iron & Steel saying earlier this year that Mittal Steel had backed away following its takeover of Arcelor. It's possible that the world's biggest steelmaker simply had other priorities, but it's equally possible that the Chinese government's increasing protectionism towards its steelmakers had a big role to play in the change of strategy.....

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