BEIJING, Mar. 16 - Analysts note that China's lead and zinc refineries are moving hard for integration despite the government's support, since large enterprises in the two sectors possess even strength and are unwilling to be incorporated into rivals in M&A.
China's recent boosting plan for the non-ferrous industry stresses to support restructuring and integration of domestic leading lead and zinc enterprises. It also expects to wash out small zinc and lead plants with annual production capacity of no more than 400,000 tons in three years.
Some analysts said that market is still the main force to eliminate lagging enterprises. Therefore the government's regulation may fail to speed up washing them out.
Insiders expect that the sliding prices of lead and zinc currently will help to kick out some small refining enterprises.
However, a researcher with Bohai Securities said that zinc enterprises all record their annual production capacity of at least 50,000 tons, and it's hard to find smaller ones. He added that the domestic zinc refineries are generally pillars for local coffers, making it harder for their merger.
Despite shrinking profits for lead and zinc enterprises, some large groups like Zhuzhou Smelter Group Co., Shenzhen Zhongjin Lingnan Nonfemet Co., Henan Yuguang Gold & Lead Co. still have plans to expand production.
This reflects the fierce competition between these groups, noted an analyst with Advanced Technology & Materials Co..
Lots of experts also hold unoptimistic view on M&A in lead and zinc sectors, saying leading enterprises in these industries may co-exist instead of integrating each other.
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