Shougang stopped production to make the market Hebei Iron and Steel "fishing profits"

Along the Chang'an Avenue all the way west, 17 kilometers away from the end of the ***, Shougang East Gate stands tall. Workers riding bicycles and wearing blue cotton coats came and went, crossing the criss-cross train tracks.

This situation will soon cease. According to the Shougang relocation plan, Shougang’s steel production capacity in the Beijing area will be fully shut down by December 31, 2010.

As a large-scale steel group with a history of 91 years, the complete shutdown of Shougang will bring great changes to the steel sales market in China, especially in Beijing. Because after Shougang stopped production, it will no longer produce building materials. According to statistics from Lange Steel Network, Shougang is a traditional building material supplier in North China. The monthly rebar output alone accounts for more than 30% of the Beijing market supply.

At the same time, Hebei Iron & Steel (000709, the stock bar) group, with Beijing as its key development area, has long been targeting Shougang’s market opportunities brought about by the overall shutdown, and has launched a market battle with Shougang and other steel companies in North China.

In addition, with the full shutdown of Shougang, Shougang's listed company Shougang shares (000959.SZ) asset replacement program also received much attention. At present, Shougang shares have been suspended from October 29.

All production was stopped on the previous year On December 20th, Shougang Corporation held an extraordinary general meeting of shareholders and reviewed and passed the "Proposal on the suspension of production of the company's steel main process" (hereinafter referred to as the "Proposal").

According to the “Proposal”, the scope of Shougang's production shutdown is the ironworks, coking plant, second steelmaking plant, and high-speed wire plant currently operating on site in Beijing Shijingshan Plant, as well as Beijing Shougang Jiahua Building Material Company and Beijing Shougang Fulu Shicai Coating Company. By the end of December, the production facilities in the above production cut-off area will all be suspended, of which the main equipment will be shut down on December 31st.

According to statistics, the income involved in this suspended asset accounted for approximately 63% of the company’s main business income, and it also involved the need to divert 6800 employees.

The original Shougang was the iron ore plant that was created by the First World War. Since Beijing had no industry before the founding of New China, since the 50s of last century, Beijing West built around the Shougang, formerly known as the "Shijingshan Iron and Steel Plant", and built the "eight factories in the west of Beijing." Beijing laid its industrial foundation.

Since the news that Shougang had halted production completely in December, the market believes that short-term supply and demand of rebar in Beijing will be in short supply, and that prices of rebar and wire rod in the Beijing market will rise against the market.

The author learned from the 6th Bohai Sea Iron and Steel Market Forum that at present, most of the steel dealers in Beijing have reduced the frequency of trading, and the move to close the store and reluctant sellers has pushed up Beijing's steel prices.

According to Lange Steel's network testing, in the current relatively low season, the rebar price in the Beijing market is close to the high point level in April this year.

Hebei Iron and Steel Group Sales Company A sales person responsible for large customers in Beijing told the author that the market shortage caused by Shougang's suspension of production will surely be difficult to supply in the short term, which will lead to an increase in the price of building materials in Beijing.

However, Lange Steel analyst Zhang Lin said that since the entire relocation of Shougang had been identified two years ago, the suspension of production was not an emergency. The market had already digested this expectation.

Fishery Shougang’s full shutdown was the most profitable one in the steel industry in Hebei Province headed by Hebei Iron and Steel Group.

The author was informed that at present, many steel companies such as Hebei Iron and Steel Group, Hebei Jingye Steel, Guofeng Steel and Jianlong Steel have targeted the Beijing market.

Yan Xiujun, general manager of Hebei Iron and Steel Group Sales Corporation, told the author that Hebei Iron and Steel Group has taken note of Shougang's next production stoppage of building materials. “If there is demand and there is a market, Hebei Iron and Steel Group Sales Corporation will definitely increase the amount of Beijing market. ".

The author was also informed that Beijing’s largest private steel trade circulation company, Beijing Jingaogang Group, has become the new long-term agreement supplier of Hebei Iron and Steel Group, and gradually increased the monthly agreement supply volume from August to the previous month. 20,000 tons increased to 40,000 tons.

The “big fish” that Hebei Iron and Steel Group has caught is also some large state-owned agreement merchants such as Sinosteel Group, Minmetals Group, and China Railway Materials Corporation.

The above sales person of Hebei Iron and Steel Group told the author that the current supply of China Railway Materials Corporation and Hebei Iron and Steel Group has increased to 30,000 tons.

Yao Ziping, general manager of China Minmetals Development Co., Ltd., also expressed to the writer that it has noticed the impact of the suspension of production of Shougang Steel to the Beijing market and that Minmetals will ensure the company’s supply stability through “multi-channel steel supply sources”. .

A number of suppliers in the Beijing area stated to the writer that they had contacted Shougang for an agreement and switched to the Hebei Iron and Steel Group. The reason is that the business focus of Hebei Iron and Steel Group is also in Beijing, and there is a special sales team in Beijing.

The author was informed by a person in charge of Shougang Sales Co., Ltd. At present, 70% of the building materials customers of Shougang have been lost.

This means that Shougang’s leading position in building materials in Beijing and even in North China will be replaced by Hebei Iron and Steel Group.

Suspension of assets Suspended After Beijing Shougang’s complete shutdown, it also involves “listening” assets of listed companies. Because, almost all the assets of Shougang listed companies are located in the Beijing area.

After Shougang's relocation plan was finalized, Shougang promised to inject stable and promising steel assets into listed companies by the end of 2010 to ensure the listed company's ability to continue operations. At the same time, the assets involved in the suspension of the listed companies will be replaced by Shougang Corporation. The listed company is placed in a way to ensure that the legal person’s property of the listed company is not lost.

On December 27, the author learned from the office of the director of the Shougang Co., Ltd. that the replacement of assets of Shougang Group could not be completed on schedule by December 31. The listed company's original production and operation capacity will be affected for a certain period of time until the completion of asset replacement. The target period is 2011. June 30.

Among them, Shougang Qiangang is most likely to inject assets, but Qiangang has not obtained approval from the National Development and Reform Commission. In addition, the shares of Beiqi, which Shougang Mining Co., Ltd., Tonghua Iron & Steel Co., Ltd. and Shougang held for a short while ago, are all potential asset replacement targets of Shougang Group.

After the full shutdown, Shougang is facing another major task is to reconstruct the old factory in Beijing.

According to the author's understanding, when Shougang Steel was listed in 1999, Shougang Corporation promised to be leased by a listed company for a period of 50 years. After the relocation of Shougang, the original lease relationship should continue to be established.

A person in charge of the Planning Department of Shougang Corporation told the author that after the suspension of production, the old factory in Beijing will be transformed into an entertainment and cultural industry base.

“This is a big pressure on Shougang. Because we are a traditional industrial enterprise, we need to adapt to a cultural industry all at once.” said the person in charge of the Planning Department said.

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