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Steel industry adapts to transformation


11-25-2016 05:03 BJT

In the midst of a global economic slowdown, China has been forced into a change of economic strategy. One of the biggest obstacles facing the government is trying to eradicate overcapacity in the steel industry. Many companies are struggling to stay afloat as the country's eases off on its supply, but our reporter Wang Hui was able to visit one which is still thriving.

High performance Chinese steel. It’s rolling off the line at one of the many factories under the wing of Hesteel Group, China’s second largest steel producer. I’m being given a tour by the deputy head of operations here, who tells me these cylinders will be used in car gearboxes.

“After the final forging it will become a cog,” said Bai Xiaomou, Shisteel Company of Hesteel Group.

Hesteel now makes cogs and many other manufactured products as wel, all part of the company’s move away from only producing raw steel.

“After our process the additional value will be increased considerably,” Bai said.

Extending the production chain is one way to avoid job cuts amid a global glut in steel.

“Factories like this one have been trying to reverse a trend over the past few years of plunging prices and foundry shutdowns due to the slowing economy, not just in China, but right around the world”.

Hesteel Group, known by the initials HBIS, has also diversified into mining and logistics.

“The pressure is coming directly from the market. Superficially we have seen the ups and downs of the price, but actually it’s the challenge to the traditional development model for companies and the model for making profits,” said Li Yiren, general manager of Strategic Planning Dept.

It’s not just about saving jobs. It’s also a key to China’s current economic transformation away from producing basic goods to high-tech parts and products. 

“Before the economic crisis the steel industry in China experienced a period that we expanded very fast. In recent years the steel industry has been developing from one of accumulating quantity to increasing quality,” Li said.



Hesteel Group has cut raw steel production by almost eight and a half million tones over the past six years. But the real goal on the factory floor is not just to cut production, but to shift China’s manufacturing and economy into a higher gear.

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