“International mining companies and China Steel have accumulated decades of cooperation and friendship, shared growth benefits, and experienced storms and rainbows, but facing the future, we still need to work together.” On November 6, at the 5th China International Import Expo At the International Summit Forum on Mineral Resources held during the period, Guo Bin, general manager of China Mineral Resources Group Co., Ltd., pointed out in his keynote speech.
Guo Bin said that China’s industry needs international resources, and the world’s mining companies need the Chinese market. Since the former Shanggang No. 1 Plant imported the first shipment of iron ore from Rio Tinto in 1973, the trade cooperation between China’s steel industry and international mining enterprises has gone through half a century. Statistics show that in the 30 years from 1991 to 2021, China has imported about 14.3 billion tons of iron ore, with a cumulative import value of more than 1.3 trillion US dollars. Over the past 30 years, in the development of mineral resources, cooperation projects between Chinese steel companies and major international mining companies have been increasing. These cooperative projects not only provide raw materials for Chinese steel enterprises but also become a friendly and open platform for China and resource countries.
In the context of sustainable development, the current industrial chain and supply chain faces certain challenges
First, the value distribution of the industrial chain is unbalanced, and the profit margins of steel enterprises are excessively squeezed. Guo Bin took the iron ore and steel industry data as an example. 2021 will be the best year for China’s steel industry in the past 10 years. The industry-wide sales profit margin is 5.1%, and the return on net assets of all listed steel companies is 13%. In the same year, the average net sales margin of major international mining companies reached over 30%, and the average return on equity was as high as 50%. In the face of high costs, some steel companies are already facing difficulties in survival, and the high cost of raw materials will be transmitted to downstream industries along the industrial chain, greatly weakening the growth foundation of the entire economy, which is unhealthy and unsustainable.
Second, resource prices fluctuated abnormally, the trend of financialization became more and more obvious, and real enterprises suffered heavy losses. At the beginning of this year, the incident of Tsingshan Holdings LME (London Metal Exchange) nickel futures caused extensive discussion and deep reflection in the industry. This incident once caused significant fluctuations in nickel prices and put the operation of the nickel industry chain into trouble. At the same time, the futures price has lost its guiding significance for the spot price, deviating from the original intention of the futures market to serve real enterprises.
Third, the pricing mechanism needs to be improved urgently, and the disordered price makes the development of the industrial chain unsustainable. Guo Bin emphasized that a company with a long-term vision, responsibility, and wisdom can have more development opportunities only by better organically combining global consensus, national policies, and corporate strategies to form a joint force.
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Post time: Nov-11-2022