On January 4, CITIC Pacific Special Steel Group Co., LTD announced that Jiangyin Xingcheng Special Steel Co., LTD received a notice from the Shanghai United Equity Exchange. Became the transferee of the 60% equity project of Shanghai Electric Group Steel Pipe Co., LTD. and successfully competed for the assets of the bid, with a transaction price of 1.908 billion yuan.
According to the announcement, Shanghai Electric Steel Pipe is a holding company specially established by Shanghai Electric Holding Group Co., LTD for holding Tianjin Pipe Co., LTD. and its core assets are the 51.02% equity of Tianjin Pipe. Tianjin Pipe inherited the core assets related to the original 3.5 million tons of seamless steel pipe production capacity of Tianjin Pipe Group Co., LTD.
Tianjin Pipe is currently a leading domestic oil and gas seamless steel pipe production enterprise with complete specifications, and has strong market competitiveness and influence in energy pipes. It is one of the main strategic suppliers of petrochina, Sinopec and CNOOC, with a high market share. At the same time, a number of high-end products of Tianjin Pipe have broken foreign monopoly, and it is one of the leading enterprises in the seamless steel pipe industry in China and even in the world.
As a leading enterprise in the special steel industry, CITIC Pacific Special Steel has purchased 40% of the equity of Shanghai Electric in early 2021. After taking part in the company, the company fully participated in the operation and management of Tianjin Pipe. In 2022, Tianjin pipe significantly reduced its loss year-on-year, and since the second quarter of last year, Tianjin steel pipe has achieved sustained profit and good growth momentum. After the completion of this transaction, Shangdian Steel Pipe will become a wholly-owned subsidiary of the company, and Tianjin Steel Pipe will become a holding subsidiary of the company.
In terms of variety specifications, Tianjin Steel pipe is mainly composed of medium and thin wall seamless steel pipes, which can effectively complement the existing medium and thick wall seamless steel pipes of CITIC Special Steel, which is conducive to improving the variety structure and specification range of seamless steel pipes of both sides, jointly realizing the industrial cluster of seamless steel pipe production and marketing coordination, and improving the overall scale and competitiveness of seamless steel pipe business of both sides.
In terms of production capacity, Tianjin Steel pipe, Baosteel pipe, Valin Hengsteel, Baotou Steel pipe and CITIC Special Steel are among the top five seamless steel pipe enterprises in China. After the completion of this transaction, CITIC Special Steel will become the world's largest seamless steel pipe production enterprise with more than 5 million tons of seamless steel pipe production capacity, the company will further consolidate and develop the seamless steel pipe market, enhance the company's overall competitiveness in the market.
Fill the energy pipe field "stuck neck" problem
This transaction also has an important benchmarking significance for the field of energy use. After the completion of this transaction, Tianjin Steel Pipe will rely on CITIC Special Steel clean steel smelting technology, pipeline steel development and other advantages, is expected to explore the development of combustible ice oil and gas energy pipe products, deep-sea oil and gas development for oil well pipe products, deep-sea oil and gas development for pipeline pipe products; Through the complementary advantages of resources, we can quickly fill the "bottleneck" problem in the field of energy pipes, ensure the security of the oil and gas supply chain, and contribute to the promotion of clean energy such as combustible ice and deep-sea oil and gas exploration and development in China, and ensure national energy security.
As early as 2021, CITIC Special Steel's annual report pointed out that the company will focus on building energy steel brands and innovative business models in addition to the two ace products of bearing steel and automotive steel. At the same time, complete the variety specifications, and strive to have more core technologies for the production and development of special seamless steel pipes.
The additional size of Tianjin Steel Pipe is an "important son" of CITIC Special Steel's strategic layout in the field of energy steel. Through this transaction, CITIC Special Steel takes this as a focus, vigorously develops the special seamless steel pipe business, and rapidly expands the scale and competitiveness of the sector; During the "14th Five-Year Plan" period, the energy steel has been built into the third biggest ace product after automotive steel and bearing steel.
It is reported that China is the main producer of steel pipes in the world, and the production of steel pipes accounts for about 60% of the global total. In 2021, the total output of seamless steel pipes in China will reach 25.5 million tons. With the continuous optimization and improvement of product structure, quality level, technical equipment and other aspects, China has gradually advanced to the world's steel pipe industry technology power.
In the domestic market, according to the "Medium and long-term Oil and Gas pipeline network Planning" jointly issued by the National Development and Reform Commission and the National Energy Administration, the compound annual growth rate of the national oil and gas pipeline network mileage is expected to reach 7.3% during the "14th Five-Year Plan" period. As a result, China's seamless steel pipe industry will enter a key stage of stable growth and industry integration in the future.
In the international market, the average price of Brent crude oil in the first half of 2022 was $104.94 / barrel, an increase of 61%. WTI crude averaged $101.66 per barrel, up 64% from a year earlier. In the context of the international situation, the construction of oil and gas extraction facilities for the purpose of energy security will also be conducive to the growth of seamless steel pipe demand.
With the blowout and growth of domestic and foreign market demand, CITIC Special Steel's strategic layout advantages in the field of energy steel will gradually emerge. In the future, the company is expected to further integrate market resources, accelerate the expansion of the strategic layout of seamless steel plate, expand the company's influence and market share in machining, oil exploitation, energy, automotive, offshore and other seamless steel pipe downstream related industries, and actively build a seamless steel pipe business with the characteristics of CITIC Special Steel. Further enhance the brand influence and industry competitiveness of the company's seamless steel pipe products.
Public information shows that after the completion of this transaction, CITIC Special Steel's annual production capacity will exceed 20 million tons, further consolidating the global special steel industry leader position. At the same time, through merger and reorganization, CITIC Special Steel helps high-quality companies such as Tianjin Steel Pipe to embark on the road of sustainable and healthy development, which has important strategic value for ensuring China's energy self-sufficiency and energy security.
