News

Steel pipe companies focus on creating differentiated model

    Under the impact of the deep downturn of steel pipe industry, the leading enterprises can not stay. Recently, Baosteel and TISCO stainless steel and other steel companies began to integrate its business, or get rid of the burden of loss, or increased investment in primary industry. You can see, the steel pipe industry is through the business integration, gradually to differentiated, features direction.
    As a leading domestic steel enterprise, Baosteel’s traditional core products mainly are automotive steel. Now it has a large number of joint venture and own brand for the domestic auto companies, particularly have obvious competitive advantage in the automotive outer panel, high-strength steel and other varieties of quality in the domestic market. Currently, the company’s cold-rolled steel products’ share has nearly 50% in the domestic market. This time the company plans to sell the stainless steel and special steel assets to controlling shareholder Baosteel Group, which is in 2005 to raise funds for the acquisition of additional projects. However, after the acquisition, the profitability of these assets are not optimistic. In addition to 2006, the other is basically a loss or at break-even edge. Although the company can not determine the future use of funds, but get rid of the burden of loss, the company can focus on carbon steel sheet and other resources for more profitable main business product development.
    Compared with the Baosteel’s stripping loss of assets, TISCO is increasing investment of the main industry. TISCO’s through increasing 559 million yuan investment of the steel tube to hold the stake from 50% to 65%. TISCO steel tube first project designed annual production capacity of 160,000 tons of stainless steel sheet, second project design capacity of 360,000 tons of stainless steel. Although the short term can not have a direct impact on company performance, but can increase stainless steel production of company through expand the capital, lay the foundation for the main business future development.
    Move of the two leading steel enterprises will undoubtedly indicate wave of industry consolidation business rise. In fact, the steel industry has reached a critical period of restructuring and development. This year due to inflationary pressures in the domestic macro-economic growth, monetary policy tightening and under the influence of aftershocks continued to slow down of the debt crisis in Europe, although steel production continues to grow, the soaring prices of iron ore and other raw materials in the context of the profitability of the industry have been greatly suppressed. 2012, the control of real estate is continual, consumption power is not enough and exports has a more complex international economic environment, macroeconomic maybe continue to slow, which makes future steel industry economic conditions is still not optimistic. Clearly, the steel business enterprises will face greater pressure, business integration and transformation of desire will be more urgent.    
    In the “12th five years plan” period, China’s steel pipe industry will focus on the implementation of the “competitive differentiation.” The plan put forward to encourage a small number of powerful steel companies developing high-end steel products differentiation and prevent the development of high-grade homogeneity. Clearly, the future of the steel industry, both from product development to large-scale applications, will explore to the “competitive differentiation” road. It does not limite to the difference in product variety, including the technical differences, regional differences, differences in the field of service are the future direction of development. This also means that, in the plan period, the policy will change the blind pursuit of high value-added development strategy, and to encourage the development of enterprises according to their circumstances and market demand, take the difference, the characteristics of the development. 

Leave a Reply