Chinese steelmakers urged to partner with downstream firms

Interfax China quoted an official with the State owned Assets Supervision and Administration Commission said China steelmakers can improve profitability by partnering with downstream industries.

Mr Wang Xiaoqi director of SASAC Planning and Development Bureau said at the 3rd Steel Industry High Level Conference that the highly concentrated nature of upstream and downstream industry in China diminishes the pricing power of the domestic steel sector.

Mr Wang cited the domestic automotive, shipbuilding and petroleum industries downstream industries that have a direct correlation to the steel sector. He said that "The output from China top five automakers account for 70% of the country's total output while the top three shipbuilding firms occupy a 44% market share.”

He added that the domestic petroleum industry meanwhile is controlled by three companies China National Petroleum Corp, China Petrochemical Corp and China National Offshore Oil Corp.

Mr Wang advised the nation's steelmakers to partner with downstream industry in order to increase the amount of steel products being used and learn more about downstream demand.

The Ministry of Industry and Information Technology aims to increase cooperation between the steelmaking and downstream equipment-manufacturing industries, Interfax previously reported. Corrosion-resistant steel used in shipbuilding is the first segment to come under the initiative. If successful, the model will be applied to other products.

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