Companies

China Metal Recycling to step up acquisitions

(Agencies)
Updated: 2010-07-05 15:29

China Metal Recycling Holdings Ltd, the nation's biggest scrap metal recycler, plans to step up domestic acquisitions as the global economic recovery reduces supplies from overseas.

The company, which counts Baosteel Group Corp and Jiangsu Shagang Group Co as customers, is seeking to buy major rivals in China's northern, middle and eastern areas to consolidate the "much fragmented" market, Chun Chi Wai, chairman and chief executive, said in a phone interview, without giving details.

Related readings:  China Metal Recycling eyes Shanghai listing by 2013-15   Metal recycling may ease steel makers' import dependence   China leads world in recycling major nonferrous metals

"We will focus on domestic recycling as China is having a shortage of scrap steel and metals," Chun said. "The recovering US and European economies will cut scrap shipments available to China this year."

China, the world's biggest steelmaker, has urged its State- owned mills to increase use of scrap to help reduce carbon emissions from blast furnaces, Wuhan Iron & Steel Group said May 26. China Metal aims to boost its domestic market share by "a few times" in three to five years, Finance Director Fung Kar Lun said in the interview.

China Metal Recycling rose 2.3 percent to HK$7.24 at 12:29 pm in Hong Kong trading. The stock has fallen 14 percent this year, compared with the 9 percent decline on the benchmark Hang Seng Index.

Scrap-steel imports by China may fall to about 6 million metric tons this year, from 14 million tons in 2009, because of higher international prices amid the global recovery, Chun said.

Baosteel, China's second-biggest steelmaker, hasn't imported any scrap for three to four months as international prices were 300 yuan ($44) to 400 yuan a ton higher than domestic prices, Chen Renhua, a manager in charge of scrap purchasing, said May 26.

China Metal Recycling's capital expenditure is estimated to be HK$350 million ($45 million) this year, which will be mainly used for acquisitions, Fung said. He didn't disclose how much will be spent on acquisitions in the next few years.