On March 4, the chairman of Baowu, Chen Derong noted the crude steel output last year of Baowu has reached 95.22 million tons, exceeding that of Arcelor Mittal (89.80 million tons) and ranking first in the world. He also said that the steel capacity of China consists of 50% of the world's steel capacity, so it’s normal for Baowu to rank the first by output. He said, however, this is just the first step for Baowu, and it will take a professional combination to increase the resources allocation effect.
Though the steel capacity and output have almost reached 100 million tons, Baowu still has much to do. He pointed that the steel price has been as low as that of cabbage. “The steel price is now 4000 RMB/MT, 2 RMB/ jin”, he said. He also pointed the enterprises need to develop multiple industries to improve their margins with difficulties surrounding enterprises like overcapacity and thin margin. It was introduced Baowu has promoted the development of other five industries including new materials, intellectual service, resources and environment, industrial park, and industrial finance than the steel industry.
Baowu had three “reconstructions” these recent years. Chen noted union construction is the necessary step for Chinese steel industries. He introduced most mills in China are still with issues like short development history, small-scale, low-level equipment distribution, disorder, and Chinese enterprises still have a lot to do to solve these problems. Che said Baowu has advantages in techniques, equipment, and talents while it wouldn’t cease to develop. Union reconstruction is the strategic step for enterprises’ development, which is the most effective and economic way to decrease losses caused by dismantling old mills and building up new mills. The union of Baosteel and Wuhan Iron and Steel has set a good example to China's supply-side reform. Chinese enterprises need to promote their developments by marketization except the “invisible hands” of the government. “Absorbing others’ advantages, reconstructing the capacity is a win-win situation for both parties, also a right direction for Baowu to improve its competition ”, he said.
Baowu will also promote its internationalization this year, mainly focusing on European and American areas and “The Belt and Road Initiative” areas. The next step for Baowu, except the union reconstruction, is to improve its global shares. He said the market of Europe and America is very mature and Chinese steel has some competitive advantages; the average steel consumption of “The Belt and Road Initiative” areas is very low, so there is a great market potential for Chinese mills.
He thinks the steel industry is an “old” industry with a very long history, while the whole market structure is still not mature and means a lot of chances for every participant like Baowu.