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Difficult decade ahead for domestic steelmakers

By Wang Ying in Shanghai | China Daily | Updated: 2013-06-05 05:54

"Steel companies can borrow ideas from (online platforms) Alibaba and Taobao, which provide logistical services themselves, so as to retain an extra 2 to 3 percent profit," he said.

Baoshan Iron and Steel Co Ltd (Baosteel), the nation's largest listed steelmaker, launched an e-commerce platform on May 31 as part of efforts to diversify its business structure amid a sluggish market, said Xu Lejiang.

The platform, Shanghai Steel Trade Center, was co-founded by Baosteel and a company under the Baoshan district government. According to sources, it is designed to provide an all-round service, including steel trades, settlements, storage and logistics to steel enterprises, traders and downstream clients. Baosteel holds a 90 percent stake in the steel trade center.

"The Shanghai Steel Trade Center will contribute between 20 percent and 30 percent of its profits to Baosteel," Ma Guoqiang, the steelmaker's general manager, was quoted as saying by the National Business Daily in late April.

Major listed steelmakers posted worse-than-expected earnings in the first quarter due to surpluses, but Baosteel remained upbeat, with its net profit surging 33.3 percent to 1.6 billion yuan ($259.8 million).

The country's 80 major steel companies posted 1.58 billion yuan in profits in 2012, tumbling 98.2 percent year-on-year, according to data from the Ministry of Industry and Information Technology.

Their sales margin was a mere 0.04 percent in 2012. That figure used to be above 2 percent, and it was 8 percent in 2004.

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