China steel companies non steel business profit

According to a market research report for March released by the China Iron and Steel Association, prices for such steel products as HRB400 rebar, hot rolled coil, medium plate and H section suffered slumps from 2013 till now and price falls for several consecutive months were noted.
Chinese steel market extended downside trend despite the overcapacity elimination moves carried out in the country. Since 2010, China’s steel industry has been struggling with excess capacity, which greatly weighed on profits of steel mills. In face of the persistent weakness in steel market, a number of listed steel companies all opted to develop non steel business to seek new sources of profit.
China’s large steel companies represented by Baosteel, Wuhan steel and Shagang each have the development target for non steel business during the 12th Five year Plan Period (2011-2015) set at more than 30% of their total revenue.
China has five steel companies included in the Ranking of 2013 World class Steel Enterprise Competitiveness released by the World Steel Dynamics (WSD). They are Baosteel(the 11th place), Shagang (the 22nd place), Anshan Steel (the 28th place), Wuhan Steel (the 30th place) and Maanshan Steel (the 33rd place).
As a matter of fact, the 32 A-share listed steel companies all possessed non steel business, mainly focusing on steel related business like minerals, logistics, machinery equipment and import & export trade, and other businesses that are not much steel related like financial services and real estate business.
It is a strategy for Chinese steel companies to develop non-steel business to cope with the challenge of low profits amid a downturn and the related assets from the development of non steel business have also become one of the reasons for their diversified strategy.
Anshan Steel, Maanshan Steel, Valin Steel and Shandong Steel have ever succeeded in turning losses into profits in a short period of time by selling assets from non-steel business.
Source – www.steelhome.cn/en