Shagang chairman Shen Wenrong steel profits is over – Steel, Sha Steel – Pump In
HC Valve Network: Started funding to 450 000, after just 23 years into the U.S. "Fortune" Global 500, Sha Steel is one of China's private enterprises, such glory behind, is to create this first-hand Steel Empire Shen Wenrong.
4 Economic stimulus plan to turn around the steel industry, steel industry, but the future is not easy. Recently, Jiangsu Sha Steel Group Chairman Shen Wenrong accepted reporter's interview, he predicted plagued by overcapacity, the Chinese iron ore negotiations in the vulnerable is difficult to reverse, and all this will also allow the Chinese steel industry in the small profit the next five years or micro-deficit state.
Reporter: The annual iron ore negotiations will start soon, the domestic steel industry has been the international iron ore next year, chief executives are expected to increase by 5% co-price -10%. How do you think iron ore prices next year?
Shen Wenrong: Since 2009, China has not set the price of iron ore negotiations, the so-called price rise, only in accordance with Japan, South Korea and the price of the three mines in terms of the basis set. I expect next year's rose more than 5% -10%, more than 10%.
Reporter: What kind of analysis is derived based on the judge?
Shen Wenrong: Since last year, Financial Crisis, many of the world's mining resources are discontinued. The first half of the total output of the three mines decreased by 10% -20% in August from this year only began to recover, so mining companies could not increase next year, the amount of resources. While we look to emerging mine, but mine to 2010, 2011, before large-scale mining. On demand, China is certainly increased, for the world is restored. Such as Japan, South Korea to resume production are basically back to the level before the financial crisis. The follow-up in China because of the impact of economic stimulus policies, the demand for steel next year on the basis of this year will increase 5%. Therefore, the level of iron ore prices remain unlikely this year, or there will be some increase.
Reporter: We see the domestic steel overcapacity, but now the iron ore price rise, while steel prices are very low, how future developments in the steel industry?
Shen Wenrong: iron ore prices will rise, the benefits of the steel industry will decline, this issue will be troubled steel companies. This is not only happening this year, not just something for next year, probably the next five years, the steel industry will enter a low-profit micro-deficit era. Such as iron and steel industry in 2006-2007, as 15% -20% gross margin of profits is over.
Present, China's steel production capacity at 700 million tons to 7.5 million tons, not down to 600 million tons, China's steel industry is very unfavorable in terms of mine is a good thing, but steel is not rising, and rising land sales to whom?
So we do not want to price hikes in iron ore negotiations, to maintain the level of this year, not up. But people (three mines) can agree that your requirements? This year's iron ore negotiations, not asking for a 40% drop it? But now this year's iron ore negotiations do not settle down.
Reporter: More and more small mines overseas to China to seek financing, the Chinese would also like to support small and medium sized mines to break the monopoly of the three mines, do you think this approach feasible?
Shen Wenrong: best to break the monopoly by small mines, it is good intentions. Even if this idea can not be achieved immediately. Not you want to break the monopoly of the three mines broken on the play, this is a long way a long process.
Reporter: Recently the Ministry of Industry is developing a series of iron and steel industry, regulatory policies, including promoting the merger and reorganization of the steel industry and the elimination of backward production capacity, etc., these policies can solve the steel industry's low-profit problem?
Shen Wenrong: The increased concentration of iron and steel. No concentration, there is no unified voice. This is no way to do.
However, mergers and acquisitions can be successful is not something one or two days. On the other hand, "iron and steel industry restructuring and revitalization plan" provides for the steel companies before the five iron and steel industry production capacity reached 45% of overall capacity. Policy on the iron and steel, are only designed for state-owned enterprises, and not a policy for small and medium private enterprises, not policy, it is difficult to carry out mergers and acquisitions.
Reporter: What do you think the policy on mergers and acquisitions is very effective?
Shen Wenrong: such as employees who solve social problems, who subsidize? This requires policy Caixing. For example, some mining resources are allocated to state-owned enterprises can be held free of charge. In addition, there are some exemptions for mergers and acquisitions policy, but private enterprise has no such policy. Also be exempted from tax revenue, but many policies do not address private enterprises. China's private enterprises accounted for the total number and capacity of 45%, 55% state-owned enterprises, the large number of private enterprises, private enterprises do not pay attention to mergers and acquisitions, industry or can not concentrate.
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