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    000898   CNE000000SQ4

ANGANG STEEL COMPANY LIMITED

(000898)
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ArcelorMittal taps into China's booming market for growth

06/15/2014 | 03:27pm EDT

Loudi CHINA (Reuters) - ArcelorMittal, the world's top steelmaker, said on Sunday it would use its Chinese joint venture to tap into the country's fast-growing car market, helping offset slackening steel demand on the back of a slowing economy.

The company's joint venture with China's Hunan Valin Steel Co starts operation this month, with an annual production capacity of 1.5 million tonnes, including hot and cold-rolled coils, and parts such as chassis and wheels.

"Demand for autos in China will continue to grow. Today, China produces about 20 million cars per year ... so there is demand for these kind of niche products, like the ultra light-weight auto steel," Lakshmi Mittal, the company's chief executive, told Reuters in an interview in central Hunan province.

China became the world's biggest auto market five years ago, with annual sales growing nearly 14 percent last year to smash through the 20 million mark, thanks to a burgeoning middle-class that is eager to spend.

ArcelorMittal, which set up the Hunan joint venture in 2010 to produce high-end automotive steels, said it has no further short-term expansion plans in Asia or elsewhere, despite steel demand gradually recovering in the U.S. and Europe.

"We don't need to grow our capacity in our business. We will supply more steel to Europe and America by increasing our utilisation," he said.

Although China's steel sector, the world's largest in terms of capacity and consumption, is already plagued by gross over capacity, there is still a shortage of high-end automotive steel.

Imports from Japan and South Korea hover between 1.5 million to 2 million tonnes per year. ArcelorMittal previously supplied steel produced outside of the country to automotive manufacturers in China.

Mittal said the Hunan venture would supply steel to international car makers and domestic players such as Geely Automotive Holdings, Dongfeng Motor Group and Shanghai Auto.

GOING ELECTRIC

China's huge automotive steel market is critically important to foreign companies, which have looked to its rapid growth to compensate for flagging sales in Europe. But Chinese laws requires foreign steel makers to team up with local partners.

South Korea's POSCO, which reported an 8 percent growth in the auto sector in its 2013 results, has also partnered with Chongqing Iron and Steel Co to build a 3 million tonnes per year auto steel plant in western China.

Despite a buoyant outlook for China's auto steel demand, some analysts have said that any stronger-than-expected growth for electric vehicles, which use more aluminium for car bodies, could take some shine out of steel consumption.

China had set a target of selling over 5 million electric cars by 2020, which would account for about one-seventh of all vehicle sales in the country if realised.

The move by Ford Motor to use aluminium for most of its F-150 truck has also renewed debate on whether aluminium would increasingly replace steel in the auto market.

"My position is that steel has the total solutions for the car industry ... which is lighter, stronger and safer material that can meet all these standards of the car industry," said Mittal.

(Reporting by Fayen Wong; Editing by Sophie Hares)

By Fayen Wong


© Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
ANGANG STEEL COMPANY LIMITED 3.52% 5 End-of-day quote.64.47%
ARCELORMITTAL 2.78% 27.165 Real-time Quote.43.88%
BAOSHAN IRON & STEEL CO., LTD. 0.37% 8.09 End-of-day quote.35.97%
FORD MOTOR COMPANY -0.65% 13.82 Delayed Quote.57.22%
HUNAN VALIN STEEL CO., LTD. 1.87% 7.62 End-of-day quote.59.41%
LETS HOLDINGS GROUP CO., LTD. -0.60% 6.66 End-of-day quote.-14.40%
NL ANTILLIAN GUILDER / NL ANTILLIAN GUILDER (ANG/ANG) 0.00% 1 Delayed Quote.0.00%
POSCO 2.17% 353500 End-of-day quote.29.96%
TEAM, INC. -0.87% 5.68 Delayed Quote.-47.89%
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Financials
Sales 2021 118 B 18 269 M 18 269 M
Net income 2021 6 118 M 944 M 944 M
Net Debt 2021 5 854 M 903 M 903 M
P/E ratio 2021 6,54x
Yield 2021 5,02%
Capitalization 45 854 M 7 075 M 7 075 M
EV / Sales 2021 0,44x
EV / Sales 2022 0,42x
Nbr of Employees 31 512
Free-Float 30,9%
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Number of Analysts 15
Last Close Price 4,35 CNY
Average target price 5,64 CNY
Spread / Average Target 29,5%
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Managers and Directors
Yi Dong Wang Chairman
Tie Jian Mu Chairman-Supervisory Board
Chang Li Feng Independent Non-Executive Director
Jian Hua Wang Independent Non-Executive Director
Wang Lin Wang Independent Non-Executive Director
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ANGANG STEEL COMPANY LIMITED64.47%6 451
ARCELORMITTAL43.88%32 430
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POSCO29.96%23 614
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