Yunhai Metal’s listed company has announced that the company's controller Mei Xiaoming intends to transfer part of its shares to Baosteel Metal to which Yunhai will also entrust part of the voting rights. This transaction is seen by market participants as Baowu intending to expand its market shares in a new materials sector and strengthen its position as an automotive sheet supplier, Kallanish notes.

According to the Yunhai Metal announcement, the control of the company may change after the completion of this transaction. The purpose of this transaction is to accelerate the strategic layout of the company and promote the application of light alloys. A formal agreement has not yet been signed, and the transaction remains uncertain.

Yunhai Metal’s main products are aluminium and magnesium alloys, which are widely used in 3C and automotive industries. Last year, Yunhai Metal's operating revenue was CNY 4.9 billion ($710 million) and its net profit was CNY 150m. Aluminium alloys account for half of the company's revenue, and magnesium alloys contribute a quarter. Yunhai Metal signed a strategic cooperation agreement with BAIC Group last year to jointly develop aluminium and magnesium alloys for the automotive industry.

Baosteel Metal is a subsidiary of Baowu Group, which covers metal packaging, metal products for the automotive trade and services. A Baosteel Metal representative says that transport sectors such as automotive and high-speed rail ways are trending towards lightweighting. One of the ways to achieve this goal is to use new materials such as aluminium and magnesium to process and produce parts.

Baosteel’s listed company, another subsidiary of Baowu, said last week that the company is actively tracking the automotive aluminium industry and intends to enter it at some stage. This action is intended to meet the needs of automotive customers for aluminium applications. Baosteel listed is China's largest supplier of automotive steel sheets, accounting for more than half of the market, according to the company's data on the Shanghai Stock Exchange.