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Xu Lejiang consider that steel companies is still full of opportunities in the marginal profit era

Recently, Baosteel Group Chairman Xu Lejiang said the Chinese steel
industry profit operating conditions expected is unlikely to change in the next
two to three years, but iron and steel enterprises still have the opportunity
to develop.

Xu Lejiang consider that 2011 the greatest feeling of pressure are high costs
of raw material, downstream demand development rate¡¯s slowdown, more competitive
of the steel industry, so that China’s steel industry get into the era of
little profit, and this operating low profit situation is expected difficult to
change in the next two to three years. In the domestic market, opportunities
are mainly from low-carbon economy of the market space. To this end, Baosteel
has begun to develop environmental management, nurturing the company’s new
competitive differentiator. In the international market, export opportunities
and resources not only from the energy sector investment, R & D but also
look ahead, make a move firstly, in order to account for the high ground in the
competition inside the industry.

For iron and steel enterprises are faced with the opportunity, Xu Lejiang
said: First, industrialization and urbanization is the theme of China has not
changed at this stage of development, especially the process of urbanization
and the development of China’s central and western regions will significantly
speed up, China’s steel industry in the long-term are still room for
development. Secondly, the current round of international financial crisis will
further promote the manufacturing and steel industry¡¯s focus transfer to China and other emerging market economies, and
promote China’s
downstream steel industry large-scale international development. This will help
the domestic steel pipe companies and other
large enterprise groups advanced to enhance the international competitiveness
and international operations. Again, the face of tight resources and the
environment, the pursuit of sustainable development and achieve a low carbon
economy is becoming the mainstream of world economic development and national
policy guidance, which will promote the iron and steel enterprises to develop
environmental management, and resource utilization for the iron and steel
enterprises to provide greater business development of space for iron and steel
enterprises seeking to green energy, new materials, green building and other
new industries breakthrough provides a good opportunity, and to the
transformation of iron and steel enterprises and multi-industry a rare
opportunity to accelerate development.

Finally, Xu Lejiang said the international is not only steel industry going
out, including the capital from overseas to come. So far, China’s use restrictions policy on
foreign large-scale capital come into Chinese iron and steel enterprises, that
with the restructuring and development of its personal depth, the Chinese steel
industry policy limit foreign capital will slowly fade coming. China’s steel tube enterprises, China’s
capital will go out to invest in building iron and steel production base.
Foreign capital, foreign steel industry come to participate in China’s steel
industries¡¯ industrial restructuring, structural adjustment, which is surely
coming trend.

    It is understood that
Baosteel as a leader in the domestic steel industry, in 2010 created
industry-wide 27% of the profits with less than 7% of the capacity . However,
in 2011, Baosteel is the same to other steel counterparts; suffer from the dual
pressures of high raw material costs and downstream demand lower development
rate.

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