China Steel Corp (
The Japan Metal Daily reported yesterday that Rotterdam-based Mittal Steel, the world's biggest steelmaker, made an offer for China Steel earlier this month and was turned down.
"Some investment banks asked us `what if Mittal Steel buys your shares?'" China Steel executive vice president Chung Lo-min (
The report comes almost a month after Mittal launched a US$23 billion hostile bid for Luxembourg-based Arcelor SA, seeking to create a company controlling 10 percent of the world's steel market.
Mittal, however, yesterday denied making a bid for China Steel, rejecting the Japan Metal Daily report.
"We have made no approach to China Steel whatsoever, and no offer has been submitted," Nicola Davidson, a Mittal Steel spokeswoman in London, said yesterday by telephone.
Mittal's expansion goals may be better served by seeking an acquisition in China, analyst Jonathan Liao (廖俊傑) said earlier in the day.
"I don't see any synergy between Mittal and China Steel," said Liao, an analyst at SinoPac Securities Corp (
"Shipping costs are high for steel, so they may want to be closer to the market," Liao said.
China is the world's biggest consumer of steel.
Shares of China Steel fell 0.4 percent to close at NT$28.7 on the Taiwan Stock Exchange yesterday. The stock has fallen 17 percent in the past 12 months, compared with a 6.9 percent gain in the TAIEX.
There is no law preventing a foreign company from bidding for China Steel, which is 23 percent owned by the government, Cheng Yu-po (
Mittal "would have to buy China Steel shares in the open market" if they want to pursue the bid, Cheng said.
"We don't have any plan to sell our stake," he said.
Chung said Mittal hasn't approached the company directly.
He wasn't certain whether the investment banks talked with the company on Mittal's behalf, he said.
Mittal has already set its sights on Chinese steel producers including Hunan Valin Steel Tube & Wire Co (
China Steel's sales last month fell 26 percent from a year earlier to NT$11.9 billion (US$366 million), the company said on Feb. 7.
Pretax profit for last year gained 0.14 percent to NT$65.1 billion, according to a Jan. 27 filing to the Taiwan Stock Exchange.
That compared with a 44 percent surge in 2004.
The company, which produced 9.7 million tonnes of steel last year, hasn't announced net income for last year. Its products include steel bars, cold-rolled plates and electrical steel coil, with applications ranging from construction to cars and washers.
Net income for the January-September period increased 24 percent from a year earlier to NT$45.8 billion.
The company cut prices about 20 percent in the last two quarters because of expanding production in China. It sells about 10 percent of its products to China.
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