Steel conduit factory focuses on logistics and opens up new profit growth points

At a steel forum held in Wuhu, Su Ganggang, general manager of Maanshan Iron & Steel Group, predicted that oversupply in the steel market will continue in 2020, and steel mills will change from past producers to service providers, involving logistics, trade, processing, and distribution. To extend the industrial chain to end-users.
The reporter of “Daily Economic News” was informed that, for the situation in 2012, more than one Ma Steel Group are holding similar views. The participating steel mills such as Hebei Iron and Steel Group, Jiangsu Shagang, and Shandong Iron and Steel Group all expressed their next step in logistics or transformation. At the forum, the industry discussed more “how to create an iron and steel logistics industry chain based on national policy development needs, thereby opening up new profit growth points.”
Due to rising raw materials and other reasons, the China gi conduit factory is on the verge of full loss in 2019. Data show that in 2011, China’s large and medium-sized gi conduit enterprises only achieved a profit of 5.43 billion yuan, a year-on-year decline of 4.2%, and the sales profit margin was as low as 2.2%, a year-on-year decrease of 0.48 percentage points. The gi conduit has entered the era of meagre profit.
To find new profit points, existing conduit companies have begun to enter the auto parts industry that is closer to the steel industry. Wang Xiangdong, deputy general manager of Jinan Steel Group Co., Ltd., believes that “the steel companies should build a “business model” at present, that is, to build a complete industrial chain from upstream to downstream, so that both raw materials and sales can be guaranteed.” In the transformation of the business model, Su Jiangang said that he should transform from a past manufacturer to a service provider.
With the continuing downturn in the conduit industry, steel mills are turning their attention to the potential of steel logistics. In January this year, Hebei Iron and Steel Group announced plans to invest 8.6 billion yuan in the logistics industry during the 12th Five-Year Plan period; in 2019, Jiangsu Shagang announced plans to spend 30 billion yuan to build the Jiulong Logistics Park to expand downstream processing industry and logistics. Wang Xiangdong also said that the reorganization of Jigang and Laiwu Iron and Steel, which took more than two years, is to develop a “cluster industrial chain” in this round of major adjustments in the steel industry, and truly form a system in all aspects of distribution and capital operation.
He Liming, president of the China Federation of Logistics and Purchasing, pointed out that at present, the conduit factories are increasing the proportion of direct sales of steel, which has increased from 40% in the past to 70% last year, which has made many steel trade middlemen gradually lose their living space. In the future, iron and steel sales agents will reshuffle, and some large-scale circulation enterprises such as China Railway Materials and Min metals are using capital and network advantages to extend upstream and downstream, and strategically cooperate with steel companies to gain more market space. He said that “the future of the logistics industry is promising, but in the process, we need to be alert to the phenomenon enclosures’ in some regions taking advantage of the construction of logistics parks.” He said that real logistics parks should have good industrial support, Convenient traffic conditions, and suitable distribution density.