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CITIC Pacific Special Steel acquired Shanghai Electric Group Steel Pipe’s 60% stake for USD 280 mln, creating the world's largest in seamless steel pipe

minutes 2023/01/12 06:28:10

Jan 12, 2023 (China Knowledge) - Xingcheng Special Steel, a subsidiary of CITIC Pacific Special Steel (000708), has won the bid for a 60% equity in Shanghai Electric Group Steel Pipe at a transaction price of RMB 1.908 bln, equivalent to USD 280 mln.

Once the transaction is completed, Shanghai Electric Group Steel Pipe will become a wholly-owned subsidiary of CITIC Pacific Special Steel, and Tianjin Steel Pipe Manufacturing the holding subsidiary.

The transaction will also witness CITIC Pacific Special Steel becoming the world's largest manufacturer of seamless steel pipes with a production capacity of more than 5 mln tons. The annual production capacity for all its special steel products could exceed 20 mln tons.

Known as a frontrunner in seamless steel pipes for oil and gas across the world, Tianjin Steel Pipe Manufacturing has a production capacity of 3.5 mln tons with comprehensive varieties and specifications. It is also very competitive in the market and command strong branding in the energy sector for its pipes. The company is also a strategic supplier to oil giants that include PetroChina, Sinopec and CNOOC.

Both parent company and the newly acquired subsidiary could complement each other products offers and jointly realize an industrial cluster via coordinated production and sales.

As early as 2021, the management of CITIC Pacific Special Steel has already emphasized its focus on building a strong brand on its products for use in the energy sector. Adding its two flagship products on bearing steel and automotive steel the company as a whole could further strengthen it special seamless steel pipe business.

For Tianjin Steel Manufacturing, the advancement of CITIC Pacific Special Steel in clean steel smelting technology and pipeline steel manufacturing could boost its development of pipes for the oil and gas sector in combustible ice mining, deep-sea oil and gas exploration.

To date, China’s production accounts for about 60% of global output, recording 25.5 mln tons of seamless steel pipe in 2021. The "Medium-to-Long-Term Oil and Gas Pipeline Network Planning" issued by the National Development and Reform Commission and the National Energy Administration, during the "14th Five-Year Plan"(2021-2025) period, could expect the compound annual growth rate of the national oil and gas pipeline network mileage to reach 7.3%.

Many industry experts believe China's seamless steel pipe industry could enter a critical stage of steady growth and industry-wide integration in coming years.

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