Beijing: Wuhan Iron and Steel Group Corp. the parent of China’s fifth-biggest steel maker, may expand in India as it is considering building or acquiring overseas plants. These plans are the result of domestic constraints and the company’s efforts to seek access to raw materials.
“We want to target emerging markets, such as Southeast Asia and India, where you have bigger growth potential,” said He Kangyang, director of overseas business at Wuhan Steel’s international division in Guangzhou on Tuesday.
India was a particularly attractive destination because it also has iron ore, he said.
China has cut export steel rebates as it forces smaller and less-efficient steel producers out of the market and moves to curb the country’s surging trade surplus. The China Iron and Steel Association said on Monday that Chinese steel exports in 2007 may be same to or even lower than in ‘06.
Large companies such as Wuhan Steel had to expand sales outside mature markets, such as the EU or the US. The company, based in Wuhan city, the capital of China’s central province of Hubei, was keenly exploring overseas opportunities, Kangyang said.
Shortages of raw material will also limit growth of Chinese steel makers, and India’s decision to limit iron-ore exports will make it increasingly difficult to secure supplies, Kangyang said.
India Feb. 28 announced a tax of 300 rupees ($7) a metric ton on iron ore exports in a bid to ensure local supplies are sufficient to meet domestic demand. The country provided 23 percent of China’s 326 million tons of iron ore imports last year, making it the second-biggest supplier after Australia.
Cuts in export rebates will have long-term effects on Wuhan Steel’s exports, he said. “Exports will be hit pretty hard, at least for the first couple of months,” headded.
Wuhan Steel shipped 1.32 million tonnes of steel in 2006, 46% rise from a year ago, he said.