Sinosteel Chairman "Weng Chaodong" wrote a letter to his colleagues today (26th), bluntly stating that "the company's operations this year may face the biggest challenge since the establishment of the factory." In addition to shocking his own employees, it also aroused heated discussions in the industry.

When Weng Chaodong recalled that in 2021, Sinosteel achieved a new profit record since the establishment of the plant. Unexpectedly, the steel market suddenly froze in the second half of 2022 and has continued to this day.

Weng Chaodong further pointed out that due to events such as the confrontation between the United States and China, global interest rate hikes and the Ukraine-Russia war, problems such as energy, inflation and supply chain disorder, as well as the slow economic recovery in various countries around the world, have resulted in a significant reduction in demand for steel. Prices cannot turn the tide.

In addition, the cost of coal and iron raw materials has also risen sharply. The price of iron ore has risen by 20% from this year's low, while the price of coal mine has soared by 40%, seriously affecting the profits of steel mills. In order to reflect the cost of raw materials, Sinosteel In the fourth quarter, steel prices also had to open at a flat high.

However, can the company turn a profit by opening steel prices at a high level? Weng Chaodong admitted that the number of orders placed by customers is still unknown at present, and domestic and foreign sales are faced with both volume and price dilemmas. In addition to steel plates and bar and wire products, domestic sales of bulk hot and cold-rolled steel products only have a marginal contribution; export sales are affected by the pressure of Chinese steel mills. Low price competition.

That is why Weng Chaodong believes that "the company's operations this year may face the biggest challenge since the establishment of the factory." Faced with the long-lasting downturn in the steel market, major Asian steel mills have adopted three major response strategies: reducing costs, increasing selling prices, and expanding sales of high-grade steel. The same is true for China Steel.

He pointed out that in the first half of the year, the sales volume of "fine steel products" was about 260,000 metric tons, accounting for less than 10% of the sales volume, but accounting for more than 50% of the gross profit. While it confirmed that fine steel products were in the right direction, it also indirectly showed that general-grade steel products Gross profit is too low.

Finally, Weng Chaodong shouted to his employees, believing that the international economic situation is changing rapidly. As long as we actively implement cost reduction, increase profits, improve business quality, and seize opportunities, the company's operations can turn around at any time, and the company's goal is to achieve an operating loss of 0.9% in the fourth quarter and the whole year. surplus.