Steel Giants Reach Substantial Deal after AllianceThree Chinese steel giants in Shanghai, Beijing and Wuhan have reached a cooperation agreement, the first substantial deal since their strategic alliance in March.The agreement includes detailed arrangement for strategic cooperation in the procurement of waste steel and product sales between the three steel giants, the Baoshan Iron and Steel Company, the Wuhan Iron and Steel Company and the Capital Iron and Steel Company. Sources from the industry described the deal as "substantial progress" following the strategic alliance. Cooperation on bulk procurement of raw material is considered as the "first and easiest step" to take. Analysts here say cooperation between the three giants in this sector will help cut costs as they are all confronted with the disorder of the domestic waste steel market. Under the agreement, the three parties will set up a joint committee on waste steel to track the market, decide on the buying prices and quantity of procurement, and take measures to address any problems that may arise. In addition, the Baoshan Iron and Steel Company will act as an agent for the Capital Iron and Steel Company in the latter's import of 100,000 tons of waste steel. Analysts say increased competition in the world's steel industry has given rise to mergers, acquisitions and alliances of the leading steel enterprises, which aim to cut costs, expand market shares and enhance competitiveness. The alliance of the three Chinese giants, which was taken as a major move by Chinese companies to prepare for the challenges brought about by the country's forthcoming accession to the World Trade Organization (WTO), has aroused worldwide attention. "The strategic alliance is a crucial step, without which it would be difficult for any single enterprise to survive the fierce international competition," said an expert here. According to a senior executive of the Baoshan Iron and Steel Company, cooperation between the three giants will hopefully be extended into more areas like scientific research and development, financing, trade and information. |
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