Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
XIWANG STEEL
HKEx Stock Code : 01266 
 
Corporate Profile
The Group is an electric arc furnace, or EAF-based, integrated steel manufacturer in Shandong Province. The Group's products consist of ordinary steel products that are used primarily in construction and infrastructure projects, as well as special steel products that are used in a variety of applications, including production of seamless steel pipes, bearings, gearings, machines parts and steel welding wires.

Business Review - For the year ended December 31, 2012

The Group is a leading EAF-based special steel manufacturer located in Shandong Province of China.

Founded in 2003, the Group was listed on the Main Board of the Stock Exchange on 23 February 2012. As an EAF-based steel manufacturer, we operate an integrated production process from steel smelting to secondary metallurgy, continuous casting and steel rolling. Our products consist of ordinary steel that are used primarily in real estate and infrastructures, as well as special steel that are used in automobile, chemical and petrochemical, machinery and equipment sectors.

We use ordinary steel billets and special steel billets as raw materials for our rolling lines. We meet our need for ordinary steel billets by purchasing from third party suppliers or by producing them in-house using our EAFs. We produce all of the special steel billets in-house in our EAFs. The raw materials used to produce steel billets are steel scraps, molten iron and pig iron. To produce special steel billets we also add alloys to get the desired chemistry composition.

Currently, we have an aggregate designed annual EAFs smelting capacity of approximately 1.0 million tonnes, and an aggregate designed annual rolling capacity of 2.1 million tonnes.

Our production activities are conducted in our production facilities located in Xiwang Industrial Area, Zouping County, Shandong Province of China. Our steel production facilities, as of the date of this annual report, consisted of:

ĦE two EAFs, EAF I and EAF II, with a designed annual capacity of 500,000 tonnes each. The two EAFs convert raw materials, primarily steel scraps, molten iron and pig iron into molten steel which will then be cast to produce ordinary steel billets and special steel billets. The ordinary steel billets are rolled into ordinary steel products of rebars and wire rods. The special steel billets are rolled into special steel products, which include quality carbon structural steel, alloy structural steel, bearing steel and steel welding wire;

ĦE two bar rolling lines, Bar I and Bar II, with a designed annual capacity of 500,000 tonnes each. Bar I and Bar II manufacture small to medium-sized steel bars, including rebars, quality carbon structural steel, alloy structural steel and bearing steel. These are the most common type in the market;

ĦE a wire rolling line, with a designed annual capacity of 600,000 tonnes. This wire rolling line manufactures steel products in the form of wire rod, which include wire rod, quality carbon structural steel, bearing steel and stainless steel;

ĦE a large bar rolling line, Bar III, with a designed annual capacity of 500,000 tonnes.

Bar III manufactures large bar of special steel products including quality carbon structural steel, alloy structural steel, alloy structural steel, bearing steel and stainless steel.

Business Outlook - For the year ended December 31, 2012

Figures from the National Bureau of Statistics of China showed that GDP of China in 2012 grew by 7.8% year-on-year to RMB51.9 trillion, experiencing the slowest growth rate in the past 13 years. The worldwide economic situation is still uncertain and there seems to be a long way to go for full recovery of the economy. Global economic slowdown curtailed demand and the steel sector in China is still facing the problem of overcapacity. However, the World Bank predicted that the actual GDP growth rate of China for 2013 is 8.4%, which would be higher than the 7.9% in 2012. The economic outlook of China in 2013 is expected to be better when compared to 2012.

The steel sector of China was encountering problems of overcapacity, under demand and low product prices in 2012. We believe the best solutions are adjustment in production volume, renovation of technology and product types, and improvement in product quality.

In the fourth quarter of 2012, National Development and Reform Commission approved investments of RMB7 trillion in infrastructure facilities including rail transportation, highway and airport and increased the target of fixed-asset investment in railway to RMB650 billion for 2013. This move will fuel the engine of economic development of China. As growth of the iron and steel sector are highly correlates with macro-economy development, we believe the operating environment will be improved in 2013 as compared with that of 2012.

In 2013, there will be new opportunity for the steel sector arising from the call for urbanization by the Central Government as highlighted in the Central Economic Work Conference in December 2012. Expert from the National Development and Reform Commission predicts that urbanization would boost at least RMB30 trillion investments in the coming decade. This favourable policy will not only simulate demand for steel from property developers, but also revitalize a number of related downstream sectors such as infrastructure, automobile and energy. We expect the domestic demand for steel from these downstream industries in 2013 will be higher than that of 2012.

Looking ahead, there will be challenges and opportunities and we will continue to closely monitor the market environment in China with an aim to capture business expansion opportunities. With the help of our advanced technology, strong production capacity and professional management team, we strive to enhance operational efficiency and expense control to improve our competitiveness to becoming a leading industry player in the special steel sector.

Source: Xiwang Special Steel (01266) Annual Results Announcement
Chairman Wang Yong Issued Capital (shares) 2,000M
Par Value HKD 0.1 Market Capitalisation (HKD) 1,420M
 
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