SHIJIAZHUANG, March 21 (Xinhua) -- Tangshan Iron and Steel Group Co, or Tangsteel, has acquired a 10 percent stake of Switzerland-based Duferco International Trade Holdings, the world's largest steel trader.
The move was jointly announced on Wednesday. The two companies also signed a structured steel prepayment agreement worth 1.2 billion U.S. dollars, which will help the Chinese steel producer expand in the overseas market and avoid international trade issues.
"Cooperation with Duferco brings us not only product orders but also advanced concepts in market, corporate culture and management skills," said Yu Yong, president of Tangsteel, a core company of Hebei Iron and Steel Group, China's largest steel company.
"In the past we had no idea about specific international clients of our products and their feedback. Now our products will be on a more international platform with the support from Duferco," Yu added.
Steel trade volume of Duferco was more than 16 million tonnes in 2012, which topped the world while the total production capacity of Tangsteel was more than 18 million tonnes last year.
The two companies started working with each other in 2009, leading to 67,000 tonnes of steel export from Tangsteel in the beginning years and then over one million tonnes last year.
The Chinese steel industry has been suffering from overcapacity and overseas trade disputes during the past year.
According to figures from the Ministry of Commerce, there have been at least 17 anti-dumping cases against Chinese steel producing companies since the beginning of 2012.
Ministry of Industry and Information Technology statistics showed the deficit of the steel industry in China reached 28.9 billion yuan (4.6 billion U.S. dollars) in 2012.
Exports were essential in soaking up excess capacity in China's steel industry but the low price strategy of Chinese companies always left themselves as targets of anti-dumping investigations, said Wang Dayong, secretary-general of Metallurgical Industry Association of Hebei.
Therefore, it is a wise choice to cooperate with international partners that are more familiar with international trade rules, said Yu.
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