Exclusive | Beijing mulls plan to create world’s biggest oil pipe manufacturer

Beijing is mulling over a plan to merge the major state-owned production facilities for steel pipes used in the oil and gas industry, in a move that would be likely to create the biggest manufacturer of its kind worldwide.

The proposal forms part of the government’s aim of reducing overcapacity and gaining pricing power over the products.

According to two industry officials who have been consulted by regulators about the potential consolidation, the merged businesses would have a combined capacity of up to 15 million tonnes. The state authorities are working on the details of the deal.

“The proposal is well received by authorities and steelmakers,” said one of the officials who asked not to be identified. “The consolidation will help avoid price wars and it is in line with the government’s policies.”

Major production assets for cold-rolled seamless steel pipes that are currently controlled by Tianjin Pipe, Baosteel, Baogang Group, Ansteel and Valin Group would be incorporated into the new entity, which has yet to be named.

The National Development and Reform Commission and the Ministry of Industry and Information Technology (MIIT) will be responsible for orchestrating the consolidation.