OREANDA-NEWS. March 23, 2012. “The way for steel industry to get off predicament and overcome difficulty is to insist on  restructuring, technical innovation and exploration to up and down stream industry chain,” Mr. Li Xiaobo, deputy to the National People's Congress and the Chairman of TISCO, assert during the interview, reported the press-centre of TISCO.
 
The international financial crisis has led the steel industry from a times of supply falls short of demand into a narrow-profit times with overmuch capacity and low efficiency. Althrough the voice of urgent transformation in economy development method in steel industry never stopped in the merely past 2011, the overall state is barely satisfactory. The sum of annual profit of all the big and medium steel enterprises in China is decreased by 4.51% compared to the previous year; sales profit dropped by 2.4%, another decline based on 2.91% drop in 2010. For the successive four years, the profit rate is lower than the interest rate of one-year bank deposit, and far lower than 6.2%, the average profit rate of national industry enterpise.
 
Li Xiaobo analyzed the main reason for low efficiency in steel industry is the relative overplus of production capacity. The difficulty in the import of iron ore and the rise in iron ore price additionally lead to the increase in production cost and decrease in profit rate.
 
Besides the above mentioned reasons, the monetary policy implementation report of the forth quarter in 2011 issued by People’s Bank of China also indicated that the factors such as a low grade product structure, a mass of out-of-date production cqapacity, and the restrictions in terms of resource, environment and etc also contribute to the low profit of steel industry.
 
What the method should steel industry apply to accelerate the transformation of its economy development mode and turn to an intensive development? Li Xiaobo thinks what should be done is to insist on the restructuring and technical innovation, and focus on the exploration to up and down stream industry chains.
 
“We launched the transformational project with a total investment of RMB 35 billion yuan in the previous year, among which 23 are key projects with investment above RMB 1 billion yuan; this year, we will invest RMB 40 billion yuan to do a series of projects of high level, high quality and high-end,” Li Xiaobo said. In the year of 2011, TISCO’s total steel output is 9.9 million ton with an increase of 3.13% based on previous year; thereinto the output of stainless steel is 3.02 million ton, increasing by 11.03%, and for the third year ranks first worldwide. The revenue is RMB 127 billion yuan, profit RMB 2 billion yuan , profit and tax RMB 4.9 billion yuan. All the indexes are among the forefront in China’s steel industry.
 
Presently, the import of iron ore is quiet difficult and the industry is urgent for restructure. Under such a background, the extention to up and down stream industries becomes an inevitable choice. It is introducted that, in recent years, TISCO has accerelated the construction of its own mine. With the start-up of Lvliang iorn ore project and Myanmar nickle ore project, as well as the expansion of Turkey chrome project, TISCO will strengthen its control to up stream resource. As for the exploration of down stream industry, Li Xiaobo expressed, in last year, TISCO Stainless Steel Industry Park invited a total investment of RMB 3 billion yuan, and TISCO will put more effort in this part, raise the stainless steel deep processing capacity and increase the annual sales. The targets is 800,000 ton per year of capacity and RMB 25 billion yuan of sales.