Steel “divestment” aspect of Hebei Iron and Steel

August 9, the Steel Group, an executive told the “Financial Times” correspondent, in accordance with the requirements of SASAC, China Steel company and Hebei aspect is gradually reducing the size of the business.”It has reduced a lot, to the end of the year will be reduced to a reasonable level.”
       According to the National Audit Office published in May this year on Sinosteel’s special audit report, “Sinosteel is 8.807 billion yuan of funds occupied partners, as of end of June 2010 did not assess the risk profile of the system, not the formation of a targetedrisk response plan. “
       National Audit Office of the special audit report also states: “Auditors noted that the above problems, the China Steel Group has set up a special steering group, in a comprehensive analysis of risk based on the formation of a risk assessment report, proposed risk control measures to gradually reduce the receivableAdvances scale; formulated the “China Steel Corporation on the implementation of party ‘triple a big’ decision-making system of the implementation measures”. “
       Public information, Hebei aspect more than 400 billion total assets, fixed assets, of which more than 300 billion yuan, more than 13,000 employees, annual output of more than nine million tons of  steel tube, annual CDQ 2.2 million tons, annual outputmethanol, 200,000 tons, 1.5 billion years, the total degree of self-generating, self-produced iron powder was 2 million tons in the country the size of the private steel enterprises in the top three, the level of advanced equipment in the forefront of the country.
       China Steel Group, the original aspect of decision-making optimistic Hebei Cangzhou base location, that other steel companies to spend huge sums of money to be transferred to the coastal production, while China Steel Group, others only need less than half of the money, you can control a coastal steel millsand greatly increase the amount of the Group’s business in the steel.So, trying to project of Cangzhou important aspect of this intervention, control of a china steel bars manufacturer companies along the coast.
        With the Steel Group, “withdraw”, Hebei vertical and horizontal faces enormous challenges.The first layer of pressure from China Steel Group “divestiture.”China Steel Group, the executives told reporters that before the end of the year, the Steel Group and Hebei aspect of the business will be reduced to “a reasonable level.”
        The second layer of pressure from the contraction of bank credit.The reporter was informed, Hebei Steel aspect occupy huge amounts of money problems came to light, has a business relationship with several banks to avoid financial risk, have to stop after the loan repayment for the loan.
        According to CISA statistics, in the first half of china steel company profit margin 2.86%, in the second half will face more difficult challenges, the situation is not optimistic about the steel industry, steel industry on the second half of the market is also filled with anxiety.
       Some analysts told this reporter that domestic inflationary trends in the economic situation is grim stage is Steel bars the current market situation of deep economic weakness in demand for roots.This is a result of this round of global steel market situation is grim, steel price has come down movements of the main factors.
        Meanwhile, the tightening of liquidity for the country’s policy has been settled, so at least a few months the steel trade and corporate banking credit funds tight situation will not improve, and this trend will continue.2010 annual average domestic sales of medium-sized steel companies profit margin is only 2.91%, lower than the national average industrial profit level this year, the average sales profit rate of the steel business is down to 2.86%.

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