Prospects for China's Steel Industry

Transcription

1 Prospects for China's Steel Industry LI Xinchuang Carrying on a Legacy, Securing Future Developments 27 November 2014

2 Outline 1. Operation Analysis of China's Steel Industry Import Export Analysis of China's Steel Products Current Issues in China's Steel Industry 13 th 5-Year Plan: Development of the Steel Industry MPI - Your Trusted Partner 2

3 1. Operation Analysis of China's Steel Industry

4 1. Operation Analysis of China's Steel Industry 1.Background Lack of Confidence in Global Economic Growth Overall Short-Term Risks Since Spring 2014, Risks of a Global Economic Downturn have been Increasing Continued Deterioration of the Geopolitical Situations and the Spread and Shock of the Risk in Financial Markets Medium- Stagnated Low Growth in Developed Economies and the Term Risks Decline of Potential Growth in Emerging Markets IMF World Economic Outlook Forecasts Region Year Year Worldwide 3.3% 3.8% Developed Markets 1.8% 2.3% Emerging Markets 4.4% 5.0% The global economic activity in the first half of this year was lower than expected. IMF has thus revised the 2014 global economic growth downwards to 3.3% and the 2015 global economic growth downwards to 3.8%. 4

5 1. Operation Analysis of China's Steel Industry 1. Background (4) Macroeconomic Situation Shows Good Signs of Stabilization Stimulus Package 钢铁 Steel (%) 2014 National 年 1-9 & 月全国和钢铁行业 Steel Industry PMI PMI Changes 变动图 Nat l 全国 (%) (%) (Jan-Sept 2014) 钢铁 Steel PMI 40.7 National 39.9 全国 PMI 49 China recently adopted steady growth and microstimulus plans among other policies to support economic development. This includes tax breaks for SMEs, acceleration of financial and infrastructure spending, targeted reduction of the reserve ratio, as well as measures by the People s Bank of China that include mortgage policy adjustments and decreased bank interest rates. Economic Performance Data 35 % Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 2014 年 1-9 月钢铁行业分项 PMI 变动图 Steel Industry PMI Changes (by Activity) (Jan-Sept 2014) 48 The first three quarters of China's GDP this year totaled RMB trillion, an increase of 7.4%. In October, China's Manufacturing Purchasing Manager Index (PMI) was 50.8%, down 0.3 percentage points from the previous month, though it was still higher than the critical point, indicating that China's manufacturing industry has continued to maintain steady growth in general. 40 Economic Projections 生产量 Output 新订单 New Orders 产成品库存 Inventory Raw 原材料库存 Materials Inventory 出口订单 Export Orders Finished Goods Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 China's GDP growth rates in 2014 and 2015 are expected to be 7.4% and 7.2% respectively. 5

6 1. Operation Analysis of China's Steel Industry (4) 1. Background Following a long historical process of socio-economic development, the outlook of the steel production industry has changed dramatically. 10KTon Global Pig Iron Production Global Crude Steel Production Global steel and pig iron production outputs (including DRI) in 1980 were 716 million tons and 515 million tons respectively. These numbers grew to 1.61 billion tons and billion tons respectively in In just over 30 years, global production outputs of steel and pig iron (including DRI) have doubled. 6

7 1. Operation Analysis of China's Steel Industry 1. Background (4) Development of the global steel industry is mainly driven by developing countries, in particular the rapid development of China s steel industry. Unit: 10KTon Global crude iron production Chinese crude iron production Proportion of Chinese production Between 2001 and 2013, global crude steel production increased by 760 million tons, of which China's production increased by 630 million tons, accounting for 82.9%. The proportion of Chinese production has risen from 18% to nearly 50%. 7

8 1. Operation Analysis of China's Steel Industry (4) 1. Background World Steel Association Lowers Global Growth Expectations Reasons for Slowdown Weakened global steel demand due to emerging and developed economies performing below expectations in 2014 Production and Operation Statistics from the World Steel Association indicate that, from January to October this year, crude steel production in the 65 major steel producing countries and regions worldwide totaled billion tons, an increase of 2% year-on-year. Demand Forecast The World Steel Association has predicted that, following the 3.8% growth in 2013, the normal apparent steel consumption in 2014 will grow by 2.0%, reaching billion tons. This figure will continue to grow by 2.0% in 2015 to reach billion tons. 8

9 1. Operation Analysis of China's Steel Industry (4) 1. Background Over the last decade or so, China's crude steel output has quickly increased from million tons in 2001 to million tons in 2013, an average annual increase of up to 15%. Pig iron production also increased from million tons in 2001 to 748 million tons in 2013, an annual average increase of 14%. Crude steel production (10K tons) Pig iron production (10K tons) 9

10 1. Operation Analysis of China's Steel Industry 2. Economic Environment (4) GDP Growth January to September 2014 recorded an economic growth rate of 7.4%, of which the secondary industry growth rate was 7.4%, less than the tertiary industry s growth rate of 7.9%. Economic development has entered a new normal. 10

11 1. Operation Analysis of China's Steel Industry 2. Economic Environment (4) Primary Industry Secondary Industry Tertiarry Industry In the first three quarters, growth in the tertiary industry accounted for 46.7% of the GDP, more than the 44.2% of the secondary industry, continuing 2013 s trend of greater tertiary industry growth compared to the secondary industry. Furthermore, the tertiary industry s GDP contribution went up by 0.6 percentage points compared to that of The differences in GDP contributions between the tertiary and secondary industries expanded by 0.3 percentage points. Contribution to GDP Growth Consumption is more important than investment in promoting economic growth! Net Exports Consumption In the first 3 quarters, consumption contributed to 48.5% of GDP growth while investment contributed to 41.3% of GDP growth. Net exports contributed to 10.2% of GDP growth. Investment 11

12 1. Operation Analysis of China's Steel Industry 2. Economic Environment (4) Fixed Asset Investment Growth Rate From January to October 2014, China's fixed asset investment totaled RMB trillion, accounting for a nominal growth of 15.9% year-on-year. The growth rate recorded a decrease of 4.2% when compared to the same period in This was a decrease of 0.2% compared to the period from January to September this year, with the falling trend still ongoing. By category, from January to October, primary industry investment totaled RMB billion, an increase of 28.9% year-on-year and a 1.2% increase when compared to the first 9 months. Secondary industrial investments totaled RMB trillion, up 13.4 percent while the growth rate was down 0.3 percentage points. Tertiary industry investments amounted to RMB trillion, an increase of 17.4% with an unchanged growth rate compared to the period from January to September. 12

13 1. Operation Analysis of China's Steel Industry 2. Economic Environment (4) For the period from January to October, new building construction area reached 1,476,610,000 sq. m., down 5.5% year-on-year. Of this, new residential construction area reached 1,028,790,000 sq. m., down 9.8% year-on-year. Considering all construction and new projects in society from January to October, total investment in construction projects reached RMB trillion, an increase of 11.5% year-on-year with a sharp decline in the growth rate of 6.7% from the previous year. Total investment in new projects reached RMB trillion, an increase of 13.7% year-on-year with a drop in the growth rate by 0.7% from the previous year. From January to October 2014, total electricity consumption in society reached trillion kwh, an increase of 3.8% year-on-year with a fall in the growth rate fell by 5.7 percentage points over the same period last year. Of the total electricity consumption, the secondary industry consumed trillion kwh of electricity, an increase of 3.9% year-on-year with a fall in the growth rate over the last year by 2.8 percentage points 13

14 1. Operation Analysis of China's Steel Industry 3. Operation (1) Crude Steel Production's Growth and Growth Rate Down From January to October, Chinese crude steel production reached million tons, an increase of 2.1% year-on-year. The growth rate went down 6.2 percentage points from a year earlier. The average daily output of crude steel in the first 9 months reached million tons, equivalent to an annual output of 823 million tons. Of these numbers, the average daily crude steel production in June reached a record high of million tons. China's Crude Steel Production Levels (10k tons / day) Oct Sept Aug Jul Jun May Apr Mar Feb Jan 2014 Dec Nov Oct Sept Aug Jul Jun May Apr Mar Feb Jan 2013 Dec Nov Oct Sept Aug Jul Jun May Apr Mar Feb Jan 2012 Dec Nov Oct Sept Aug Jul Jun May Apr Mar Feb Jan

15 1. Operation Analysis of China's Steel Industry 3. Operation (2) Rapid Growth of Steel Exports From January to October, total Chinese steel exports of steel reached million tons, a substantial increase of 42.2% year-on-year. On the other hand, steel imports reached million tons, an increase of only 4.1% year-on-year. This translates into a crude steel net export of million tons (up 53.2% year-on-year). In terms of prices, the average steel export price from January to October was US$ / ton, down 9.2% year-on-year. The average steel import price from January to October was US$ 1,246.4 / ton, an increase of 2.8% year-on-year. Increase: 42.2% Increase: 4.1% Steel Exports (10KTons) Steel Imports (10KTons) Same Period 2013 Jan-Oct 2014 Same Period 2013 Jan-Oct

16 1. Operation Analysis of China's Steel Industry 3. Operation CSPI Settlement Price (RMB/ton) (3) Overall Steel Prices Show Downward Trend Amid Low Prices Since the start of the year, apart from the slight rebound in April, the overall domestic steel prices have been shown a downward trend. Until late November, the Composite Steel Price Index (CSPI) fell to points, points lower than at the beginning of the year and a decrease of points compared with the same period of the last year. In the first three quarters of 2014, the steel sales settlement price of the key iron and steel enterprises included in the statistics was RMB 3,150, a fall of 292 RMB / ton when compared with the figure in 2013, and down RMB 1,318 / ton when compared with the same figure in

17 1. Operation Analysis of China's Steel Industry 3. Operation Social Inventories Business Inventories Steel Social Inventories (10K tons) Key Steel Business Inventories (10K tons) (4) Rise in Social Inventories followed by Decrease, Business Inventories Remain High From social inventories, steel inventories of major markets nationwide at the end of October reached million tons, down million tons when compared to the high of million tons in late February 2014, a decline of 50.0%. Compared with the end of December 2013, social inventories of steel decreased by million tons, a decline of 23.9%. Steel business inventories show that steel inventories of CISA key enterprises reached million tons, an increase of million tons when compared to the same period last year, or an increase of 9.8%. Compared with the figure earlier this year, there was an increase of 2.15 million tons, or an increase of 17.9%. 17

18 1. Operation Analysis of China's Steel Industry 3. Operation (5) Total Profits Rebounded with a Very Low Level of Profitability From January to October 2014, key steel enterprises realised a sales income of RMB trillion, down 1.03% year-on-year, and RMB billion in profits and taxes, an increase of 13.04% year-on-year. The enterprises also realised RMB billion in profits, an increase of RMB billion year-on-year, or an increase of 61.33%. Main businesses achieved a turnaround in profits with a realised profit of RMB billion. In the first 10 months, the key steel-making enterprises included in the statistics recorded a loss of 23.86%, which amounted to RMB billion. The profit margin was only 0.75% with performance among the lowest performing main industrial sectors. Statistics of Key Iron & Steel Enterprises (first 10 months) Sales profit Profits Main Business Profits All Industries Coal Telecommunicatio ns Equipment Textile Automobile General Equipment Steel RMB 100 millions 18

19 1. Operation Analysis of China's Steel Industry 4. New Features of Operation New Feature 1: Ups and Downs in Crude Steel Output of Key Provinces & Cities, with Significant Differences From January to October, the top ten provinces (including cities and districts) of crude steel production produced a total of 492 million tons of crude steel, accounting for 71.8% of national output. Of them, crude steel production of the three provinces of Hebei, Shanxi and Tianjin was down 2.6%, 3.1% and 0.3% respectively, year-on-year, a drop of 10.1, 15.5 and 10.4 percentage points from last year. Crude steel production in 7 provinces (including Jiangsu, Liaoning, Henan and Hubei) showed continued growth with crude steel production in Jiangsu, Liaoning and Henan increasing by 9.3%, 5.4% and 7.3% respectively. The total new production of these 3 provinces was million tons, accounting for 81.2% of the nationwide increase of million tons. Top 5 provinces with Increased Crude Steel Output (10K tons) Jilin Chongqing Shanxi Heilongjiang Hebei Top 5 provinces with Reduced Crude Steel Output (10K tons) Jiangsu Liaoning Guangxi Henan Guangdong 19

20 1. Operation Analysis of China's Steel Industry 4. New Features of Operation New Feature 2: Prices of Long Products such as Rebar experience a Greater Fall than that of Sheet Products Since the beginning of the year, domestic steel prices have been declining with prices of rebar and wires falling significantly more than prices of hot-rolled coils, cold-rolled sheets and galvanized sheets. Until the first three weeks in November, the average price of (Grade III) rebar in the domestic market stood at RMB 2,968 / ton, with the price index at 84.6 points. The figures decreased by RMB 585 / ton and points, compared with those at the beginning of the year. The average price of hot-rolled coils in the domestic market was RMB 3,144 / ton, with the price index at points. The figures fell by RMB 509 / ton and points respectively, compared with those at the beginning of the year. Units: RMB/ton High speed wire Rebar Square Rod Medium Sheets Domestic Steel Composite Index Long Products Sheet Products Hot-rolled coils Cold-rolled sheets HDG Sheets Seamless Pipes Domestic Steel Market Price Index of Eight Varieties Domestic Steel Market Prices of Eight Varieties 20

21 1. Operation Analysis of China's Steel Industry 4. New Features of Operation New Feature 3: Varied Degrees of Decline in Regional Steel Prices: Beijing, Tianjin and the Yangtze River Delta Region Experience Larger Decline Take construction-use steel rebar that accounts for the largest share of the consumer market and experienced the biggest price drop for example. Until mid-november, steel re-bar prices in Nanjing, Shanghai, Beijing and Tianjin were RMB 3,000 / ton, RMB 2,980 / ton, RMB 2,650 / ton and RMB 2,700 / ton respectively, down RMB 680 / ton, RMB 570 / ton, RMB 670 / ton and RMB 610 / ton compared with the beginning of the year, a decline of 18.4%, 16%, 20.1% and 18.4% respectively. These declines in prices were greater than those in Kunming, Guangzhou and Wuhan and the rest of the country. Start of year Present 21

22 1. Operation Analysis of China's Steel Industry 4. New Features of Operation New Feature 4: Iron Ore Prices Fell Far More Than Steel Prices Since the beginning of this year, overall iron ore prices have continued to show a downward trend that persisted despite a slight rebound midway through the year. On 21 November, the CIF value of directly imported iron ore (grade 62% dry powder ore) was US$70.57 / ton, while the average price of the month was US$ / ton. The price (tax included) of domestic iron ore (grade 62% dry iron ore) was RMB / ton, whilehe average price of the month was RMB / ton. The CSPI since the beginning of the year has declined by about 13%, far below the decline of about 44% in iron ore prices. Trend of Imported Iron Ore CIF & Spot trading Prices in RMB Imported Iron Ore CIF Imported Iron Ore Spot Price Trend of Domestic Iron Ore Prices & Imported Iron Ore Prices in RMB Domestic Imported Iron Ore Spot Iron Ore Price (RMB) Prices 2 Jan 7 Feb 3 Mar 1 Apr 4 May 3 Jun 1 Jul 1 Aug 1 Sept 8 Oct 3 Nov 3 Nov 5 Nov 6 Nov 7 Nov 10 Nov 11 Nov 12 Nov 13 Nov 14 Nov 17 Nov 18 Nov 19 Nov 20 Nov 21 Nov 2 Jan 7 Feb 3 Mar 1 Apr 4 May 3 Jun 1 Jul 1 Aug 1 Sept 8 Oct 3 Nov 3 Nov 5 Nov 6 Nov 7 Nov 10 Nov 11 Nov 12 Nov 13 Nov 14 Nov 17 Nov 18 Nov 19 Nov 20 Nov 21 Nov 22

23 1. Operation Analysis of China's Steel Industry 4. New Features of Operation New Feature 5: Greater Decline of Investments in Ferrous Metal Smelting and Rolling Industries, Decreased Investment in Steel Smelting Investment in ferrous metal smelting and pressing industries fell by 2.1% in From January to September this year, investments in these industries reached RMB billion, down RMB billion year-onyear, or 5.0%, which was greater than the decline in the previous year. From January to September 2014, total investment in the steel smelting sector (including iron and steel) was about RMB billion, down RMB billion year-on-year, a decline of 17.1%. Decrease: RMB billion Decrease: RMB billion Investments (100 Million RMB) Investments (100 Million RMB) Investment in Ferrous Metal Jan-Sept 2013 Jan-Sept 2014 Smelting and Rolling Industry Jan-Sept 2013 Jan-Sept 2014 (RMB 100 million) Completed Investment in the Field of Iron and Steel Smelting (RMB 100 million) 23

24 China's Steel Industry Has Entered a New Normality of Development New Normal of China s Steel Industry Within a Fairly Long Period of Time Low Growth: Production consumption fluctuates at the peak level. High Pressure: High pressure situation maintained due to environmental measures; the financial environment is not conducive to the steel industry. Normality 1 Normality 2 Normality 4 Normality 3 Low Price: Overall steel prices are at an absolute low while overall ore prices are relatively low. Low Efficiency: The market is fiercely competitive while operational difficulties persist Fundamental Way-Out The 5 th Normal Development Continuous Innovation and Concept Innovation Business Model Innovation Management Innovation Technical Innovation 24

25 Chinese Steel Consumption Outlook Exploration of Ideas & Research Directions (1) Downstream Industry Consumption No. Industry Steel Consumption in 2014 (10k tons) Various Industry Needs Steel Demand Forecast 2015 for Various Industries Steel Demand in 2015 (10k tons) Year-on-Year Growth Rate in Construction % 2 Machinery % 3 Shipbuilding % 4 Automobile % 5 Home Appliances % 6 Container % 7 Energy % 8 Railroad % 9 Others % Total % By finding the downstream industry steel consumption, Chinese steel demand in 2015 is estimated to be 723 million tons. China Metallurgical Industry Planning & Research Institute (MPI) 25

26 Chinese Steel Consumption Outlook Exploration of Ideas & Research Directions (2) Crude Steel Production Forecast Chinese Steel Demand Forecast 2015 No. Name Year-on-Year Growth Rate 1 Steel Demand / 100 million tons % 2 Crude Steel Output / 100 million tons % 3 Iron Ore Imports / 100 million tons % 26

27 Chinese Steel Consumption Outlook (4) Promoting the Expansion and Upgrade of Consumption & Facilitating the Improvement of Economic Quality and Efficiency Exploration of Ideas & Research Directions The Standing Committee of China s State Council noted on 29 October 2014 that consumption is an important engine for economic growth and is where China s potential to develop lies. The Committee called for a focus on the promotion of six areas of consumption, namely, information consumption, green consumption, housing consumption, tourism and leisure spending, education consumption as well as pension, health and household consumption among others. 27

28 Chinese Steel Consumption Outlook 2015 Green Consumption Industry Development Trends Green, Low-Carbon, Energy-Saving and Land- Saving Buildings Lightweight Vehicles, New Energy Vehicles Huge Yet Lightweight Engineering Machinery Large-Capacity, High-Performance, Energy- Saving Appliances Trends of Steel Use in Industry High-Intensity Seismic Reinforced High-Performance Z- Shaped Panels Third-Generation Advanced High-Strength Steel For Cars High-Standard Bearing Steel, High-Performance Gear Steel, High-Strength Cold-Heading Steel and Plates for Thin-Gauge High-Strength Engineering Machinery Thin-Gauge High-Strength Environmentally Friendly Cold- Rolled and Coated Laminates and High-Grade Electrical Steel Housing Consumption Housing consumption has always been important to consumption. The Committee clearly requires the country to stabilise housing consumption, increase low-income housing construction, and relax the conditions for the withdrawal of the provident fund to pay rents. In addition, the People's Bank of China and the China Banking Regulatory Commission has jointly issued a document to reiterate first mortgage benefits and the deregulation and adjustment of the "credit limit" policy. Policies have moved to the promotion of both investment and consumption. It is expected that public housing construction in China will grow steadily. The real estate investment market continues unabated, and the supporting infrastructure will rise steadily. Both the area and completed area of the national housing construction (including commercial housing and public housing) will remain at a relatively high level, and investment in transportation infrastructure projects such as railways and highways will remain stable, with urban infrastructure tending towards rapid growth.

29 2. Import Export Analysis of China's Steel Products

30 (A) Steel Imports & Exports (by Variety) 1. Steel Export Varieties In the first three quarters, varieties of exports with a greater year-on-year increase include bars, medium-thick wide strips, cold-rolled sheets and hot-rolled narrow strips, with an increase of 83.5%, 81.5%, 59.8% and 52.4% respectively. Varieties with greater year-on-year decline in exports include extra-thick plates and rebar, with a decline of 53.4% and 31.6% respectively. Total y.o.y Increase & Decrease (10Ktons) Total y.o.y Increase & Decrease (%) Bars 10k tons Medium Wide Strip Sheets Wires Plated Sheets (Strips) Medium Sheets Colour-coated strips Cold-rolled wide strips Cold-rolled sheets Medium,Small size Bars Railroad Materials Hot-rolled narrow strips Hot-rolled wide strips Large size bars Seamless Pipes Cold-rolled narrow strips Electrical Steel Hot-rolled Sheets Welded Pipes Extra-thick Sheet Thick Sheet Rebar % 30

31 (A) Steel Imports & Exports (by Variety) 2. Steel Import Varieties In the first three quarters, 17 varieties of steel imports showed a year-on-year increase in total imports while 4 varieties showed a decrease. Among them, varieties with a larger total increase were hot-rolled sheets and wires, with an increase of 52.8% and 31.8% respectively. The variety with a larger year-on-year decline in imports was railway materials, with a decline of 57.4%. Accumulated change in output (10K tons) Accumulated change in output (%) Plated Sheets (Strips) Medium Sheets Medium Wide Strip Sheets Wires Hot-rolled Sheets Bars Seamless Pipes Thick Sheet Colour-coated strips Welded Pipes Cold-rolled sheets Extra-thick Sheet Hot-rolled narrow strips Medium,Small size Bars Cold-rolled narrow strips Large size bars Rebar Railroad Materials Electrical Steel Hot-rolled wide strips Cold-rolled wide strips 10k tons % 31

32 (B) Breakdown of Steel Imports & Exports China's main steel imports and exports are of sheet metals In the first three quarters, China's total imports of steel products reached million tons, of which million tons were sheet imports, accounting for 83.5% of total imports. Over the same period, total exports of steel products reached million tons, of which a large amount consisted of sheet metal exports reaching million tons, accounting for 47.7% of total exports. Sheets Pipes Sheets Pipes Railroad Railroad Others Others Square Rods Bars/Wires Square Rods Bars/Wires Ratio of Cumulative Steel Imports (by Variety) in the First Three Quarters Ratio of Cumulative Steel Exports (by Variety) in the First Three Quarters 32

33 (C) Prices of Steel Imports & Exports 1. Monthly Price Gap Between Steel Imports and Exports Since 2013,the monthly average price difference between China's steel imports and exports have had an overall widening trend. In the first 10 months of 2014, the average price of China's steel exports was US$ / ton, a decrease of US$ 78.7 / ton (a decrease of 9.2%) compared with the same period last year. The average price of steel imports was US$ 1,246.4 / ton, an increase of US$ 35.3 / ton (or 2.9%) compared with the same period last year. In October, the price gap between China's steel imports and exports was US$ 518 / ton, an increase of US$33.0 / ton (MoM). Average Import Price Difference (US$/Ton) Oct 2014 Sept 2014 Aug 2014 Jul 2014 Jun 2014 May 2014 Apr 2014 Mar 2014 Feb 2014 Jan 2014 Dec 2013 Nov 2013 Oct 2013 Sept 2013 Aug 2013 Jul 2013 Jun 2013 May 2013 Apr 2013 Mar 2013 Feb 2013 Jan 2013 Import Price Export Price Average Export Price Difference (US$/Ton) Oct 2014 Sept 2014 Aug 2014 Jul 2014 Jun 2014 May 2014 Apr 2014 Mar 2014 Feb 2014 Jan 2014 Dec 2013 Nov 2013 Oct 2013 Sept 2013 Aug 2013 Jul 2013 Jun 2013 May 2013 Apr 2013 Mar 2013 Feb 2013 Jan

34 (C) Prices of Steel Imports & Exports 2. Prices of certain imported steel products remain high In the first three quarters, the average import price steel products in general was within the range of US$ / ton. Varieties of imports with the average import price within the range of US$ / ton included hot-rolled strip steel rods, hot-rolled steel plates, ordinary thick steel plates thicker than 50mm, non-alloy color-coated steels with width >= 600mm, galvanized boards (strips), ordinary hot-rolled narrow strips. Varieties of imports within the import price range of US$ / ton included special mini steels, cold-rolled stainless steel sheets and other steel pipes. Varieties of imports with average import price around US$ 3,000 / ton included seamless pipes for oil and gas drilling. Average Import Price (US$/Ton) Cold-rolled stainless steel narrow strips Petroleum/Natural Gas Drill Seamless Pipes Spcial Merchant Bar Cold-rolled stainless steel sheets Other Welded Pipes Hot-rolled Alloy Sheets Hot-rolled Alloy Bars Non-alloy steel (Width>=600mm) Extra thick sheets (Thickness>=50mm) Galvanised Sheets(strips) Hot-rolled narrow strips Cold-rolled allow sheets Non-oriented silicon steel 34 Large size bars Hot-rolled sheets Normal Rods Hot-rolled alloy medium-thick wide strips Cold-rolled thin rolls (Thickness<0.5mm) Thick steel sheets (20<Thickness<50mm) Railway Tracks Cold-rolled thin rolls (Thickness.5-1mm) Hot-rolled wide strips Normal medium-thick wide strips Hot-rolled Rebar

35 (C) Prices of Steel Imports & Exports 3. Prices for Most Varieties of Steel Export Remain Low In the first three quarters, the average export price of most steel products were below US$ 1,000. Only 4 varieties of steel products (all made of stainless steel strip) had an average export price exceeding US$ 2000 / ton, namely, cold-rolled stainless steel narrow strips, cold-rolled stainless steel thin sheets, hot-rolled stainless steel thin wide sheets and hot-rolled think stainless steel medium-thick wide sheets. Average Export Price (US$/Ton) Hot-rolled stainless steel medium-thick wide strips Hot-rolled stainless steel thin wide strips Cold-rolled stainless steel thin sheets Cold rolled stainless steel narrow strips Seamless pipes for petroleum/natural gas drilling Seamless pipes for petroleum/natural gas transport Hot-rolled alloy narrow strip strips Non-oriented silicon steel Welded pipes for petroleum/natural gas transport Extra-thick sheets (Thickness>50mm) Sheets (Thickness <1.5mm ) Railway Tracks 35 Hot-rolled thin sheets Hot-rolled thin wide strips Thick sheets (20<Thickness<50mm) Large size bars HDG Sheets (Strips) Cold-rolled thin sheets (strips) Hot-rolled rebar Cold-rolled thin rolls (Thickness: 0.5-1mm) Cold-rolled thin rolls (1mm<Thickness<3mm) Special merchant bars Hot-rolled alloy sheets Hot-rolled allow rods

36 (C) Prices of Steel Imports & Exports 4. Steel Varieties with Larger Import and Export Price Gaps In the first three quarters, Chinese steel varieties with a larger import and export price gap were special merchant bars, seamless pipes for oil and gas drilling, hot-rolled steel plates, hotrolled steel strip bars and ordinary thick steel plates with thickness > 50mm. Serial No. Variety Average Import Price Average Export Price Price Gap (Import Price - Export Price) 1 Special Merchant Bars Seamless Pipes for Oil and Gas Drilling Hot-Rolled Steel Plates Hot-Rolled Steel Strips & Bars Thickness > 50mm Regular Thick Steel Plates Unit: USD 36

37 (D) Steel Imports & Exports (by Country) Exports by Country In the first three quarters, Chinese steel was mainly exported to South Korea, Southeast Asia and the United States, among other countries and regions. Export Volume (10K Tons) S. Korea Vietnam Philippines USA Singapore Thailand Indonesia India Hong Kong Taiwan Imports by Country China's steel import source countries (and regions) were mainly concentrated in Japan and South Korea. In the first three quarters, China's total steel imports from the two aforementioned countries reached million tons, accounting for 73.6% of total steel imports. Import Volume (10K Tons) Japan S.Korea Taiwan Germany France 37

38 3. Current Issues in China's Steel Industry

39 Current Issues in China's Steel Industry Serious Problems with Capital Chain Unprecedented Pressure for Environmental Governance Lack of Systems to Protect Iron Ore Resources Conflicts arising from serious Steel overcapacity Current Issues in China's Steel Industry Enterprises as a Whole are Inefficient Serious Differentiation of Enterprise Profits, Enterprises in Difficulty Experience High Risk 39

40 1. Serious Steel Overcapacity Rethinking Steel Overcapacity Controversy: No Excess or is Excess not Serious 5 Aspects to Consider Serious Excess Capacity Utilisation Actual Capacity Market Perspective Operational Efficiency Excess Size There has been a significant decrease since the third quarter of Over more than two years' time, the overall figure has been in the range of 70%-75%, lower than the warning value. The aforementioned capacity utilization rates are estimated based on design capacity. The actual production capacity may far exceed this value due to factors such as technological advancements and improvements of complementary conditions, among others. Due to market failure, many companies subject to non-market factors could barely maintain production. From a market perspective, the current utilization rates should be at a lower level. Special Contradi ction Sales profits are the lowest in the industrial sector. The iron and steel industry business is still posting a loss even after taking into account factors such as the return on assets and non-steel related benefits. The scale of China's steel industry is massive with a total excess of over 200 million tons and is equivalent to the excesses of Japan and of the United States combined. It is estimated that it involves an investment of RMB 700 billion and 40 million employees. 40

41 2. Serious Problems with the Capital Chain Capital Chain Financing Channels Iron & Steel Enterprises Capital Debt Rate High Corporate Financing Difficult & Costly Sharp Rise in Accounts Payable & Accounts Receivable 41

42 2. Serious Problems with the Capital Chain High Capital Debt Rate Capital Debt Rate Proportion of Steel Production Proportion of Steel Production Companies with Debt Rate >70% Other companies Companies with Debt Rate >80% Other companies 42

43 2. Serious Problems with the Capital Chain Corporate Financing Difficult & Costly Essentially flat, down slightly Increase: 13.2% Steel Company Loans (100 million RMB) RMB Loans (100 million) End Sept 2013 End Sept 2014 End Sept 2013 End Sept 2014 Proportion of Loans Increase: 22.9% Short-term Long-term Financial Expenses (Association companies) (Trillion) 43 1 st 9 Months of st 9 Months of 2014

44 2. Serious Problems with the Capital Chain Sharp Rise in Accounts Payable & Accounts Receivable Compared to Sept 2011 Compared to Sept 2008 Accounts Payable (100 million RMB) Accounts Receivable(100 million RMB) Sept 2014 Sept 2011 Sept 2008 Increase in Accounts Payable (100 million RMB) Increase in Accounts Receivable(100 million RMB) As of the end of September this year, the accounts payable of key steel enterprises totaled RMB billion, and their accounts receivable totaled RMB billion, representing an increase of RMB 95.7 billion (+26.4$) and RMB 23.6 billion (+22.7%) respectively from the same values at the end of the third quarter of 2011 when serious capacity surplus first appeared. This also represented an increase of RMB billion (+66.1%) and RMB 50.5 billion (+65.4%) respectively from the same values in the third quarter of 2008 just before the end of the financial crisis. It should be noted that the increase in the total size and growth rate of the accounts payable were higher than those of the accounts receivable with a constantly worsening trend for the corporate debt burden. 44

45 3. Unprecedented Pressure for Environmental Governance Environmental Crisis Haze Days (Live View) 7-13 Jan 2013 Central Observatory 1-2 Days 3-4 Days 5-6 Days 7 Days One-Third of the Territory is Enveloped by Haze Taking an equally tough stance against pollution as against poverty. "CPC Central Committee's Decision on Major Issues Concerning Comprehensively Deepening Reforms" has proposed to deepen the structural reform for ecological civilization 45

46 3. Unprecedented Pressure for Environmental Governance Environmental Policy Constraints Continue to Strengthen Existence "PM 2.5 Decreases by 20%" - Air Pollution Prevention and Control Action Plan "New Emissions Standards for Steel & Iron" - Most Stringent standards in History "Serious Environmental Pollution Crime" - Criminal Offense 46

47 3. Unprecedented Pressure for Environmental Governance Environmental Operating Costs Per Ton (RMB/Ton) Environmental Issues for China s Steel Enterprises Domestic Sulphur Dioxide Emissions (%) Japan/S.Korea Industry Average Domestic Advance Sulphur Dioxide Emissions Per Ton (kg/t) Steel industry's emissions per ton have been declining yet the industry's total emissions remain to be high, accounting for 11.4% of the nation's total emissions, second only to the electricity & heat industry. Ferrous Iron Smelting and Rolling Energy, Heating Others Source: Environmental Statistics Yearbook 2013 New Japanese Steel Industry Average Baosteel Steel Particle Emissions Per Ton (kg/t) Environmental protection has exacerbated the pressure on the survival and development of the steel and iron industry. The steel & iron industry has entered the repayment period for the environment. Due to issues such as regulation and law enforcement, there is a serious imbalance in terms of environmental protection among enterprises, resulting in the effects of "Gresham's Law" which distorts competition and affects the healthy development of the industry. ThyssenKrupp Industry Average Pohang 47

48 4. Lack of Systems to Protect Iron Ore Resources Iron Ore Import Volume (10K tons) Iron Ore Import Price (USD/T) Foreign Dependence Proportion of Japanese Mining Rights:25% Proportion of Chinese Mining Rights:9% Proportion of Non- Chinese Mining Rights: 91% Proportion of Japanese Mining Rights:75% Domestic Key Mine Average 48 3 Main Mines Proportion of Domestic Iron Ore Costs >US$110 Proportion of Domestic Iron Ore Costs <US$110 Cost (USD/t) Due to poor domestic iron ore resources, there is a trend of rising difficulty and cost of development. There is also a high dependence on international iron ore resources and a low proportion of mining rights. Development of overseas iron ore projects requires huge capital investments, and these projects have lagging infrastructure development and high production costs. There is a lack of competitive advantage when compared with major global iron ore producers meaning greater risks for market operations.

49 5. Enterprises as a Whole are Inefficient Per Capita Steel Production (ton/ person year) Efficiency of China s Steel Enterprises Steel Industry Per Capita Steel Production (ton/ person year) France Germany Taiwan China USA Japan Anshan Steel Shan Steel Chongqing Steel Bohai Steel Valin Steel Ma Steel Domestic Average Wuhan Iron & Steel Baosteel Nanjing Steel Zhongtian Steel Guofeng Steel Delong Steels Jinxi Group Rizhao Group ChinaSteel Nucor JFE Pohang Steel Per Capita Steel Production (ton/ person year) Profit per ton (RMB/t) Efficiency is an important driving force for enhancing profitability. People are the key to and core of efficiency. Factors such as quantity, quality, organization and ability of staff are essential considerations. Equipment, plants, facilities and information technology are among the factors that form the basis for efficient hardware. Anshan Steel Shan Steel Chongqing Steel Valin Steel Baosteel Nanjing Steel Zhongtian Steel Delong Steels Jinxi Group Shagang Group Rizhao Group Pohang Steel 49

50 6. Serious Differentiation of Enterprise Profits, Enterprises in Difficulty Experience High Risk The top ten profitable companies had a total output of million tons, accounting for only 22% of the key companies. Even so, their total profits reached RMB billion, accounting for 97.7% of the profits achieved by key companies and 64.4% of the profits of all companies. The top ten companies with the greatest losses accounted for more than 96.7% of the losses. The serious differentiation of profits for steel companies will further accelerate the pace of industrial adjustment, which means that, at the same time, companies with operational difficulties will enter a window period of risk outbreak. Proportion of other companies with losses, 3.30% Top 10 companies with profits 2013 (100 million RMB) Proportion of Top 10 companies with losses Other companies with profits, 2.30% Proportion of Top 10 companies with losses, 96.70% Proportion of other companies with losses Baosteel Shagang Xinxing Ductile Iron Pipes Valin Steel Gaungzhou Steel CITIC Pacific Fangda Special Steel Hangzhou Steel Shiheng Spcl Steel Xinwuan Steel Proportion of Top 10 companies with profits Other companies with profits Top 10 companies with losses 2013 Proportion of Top 10 companies with profits, 97.70% 50 Company A Company B Company C Company D Company E Company F Company G Company H Company I Company J

51 Causes of the Current Issues in China's Steel Industry Causes A There is an extraordinary growth in the market with advance overdraft consumption Illogical organisational structure and poor self-discipline D Main cause is the institutional mechanism B Reliance on approvals and ignorance of regulations Inadequate implementation of policies and low noncompliance costs C 51

52 4. 13 th 5-Year Plan: Development of the Steel Industry

53 (A) Development Environment International Environment Complex & Ever-Changing Trade Protection Intensified Competition 53

54 (A) Development Environment Domestic Environment Medium-Speed Growth Structural Adjustments Tight Constraints Reforms & Innovation Open Development 54

55 (B) Steel Industry Situation Analysis Steel Consumption Long-and- Medium-Term Forecasts China's steel production and consumption will remain at the peak value for quite some time Chinese steel consumption forecast for 2025 is estimated using 2 methods: Downstream industries Analysis & Prediction and GDP Consumption Intensity. After applying the weighted average, China s steel consumption in 2017 is estimated to reach a peak value of 740 million tons. It will then be followed by a gentle decline, reaching 720 million tons in 2020, and 660 million tons in Peak in 2017: 740 million tons 2020: 720 million tons 2025: 660 million tons Chinese Steel Consumption Forecasts

56 (C) Mainline of Steel Industry Development in Accordance with the 13 th 5-Year Plan Main Period of Development in Accordance with the 13 th 5-Year Plan Reform Adjustment Environmental Protection Innovation Goals: 1. Maximise value for customers: The market economy must caters to its users, otherwise it would be difficult to survive. 2. The constant pursuit of the maximization of production factor (equipment, raw materials, technology, capital and human resources) efficiency to ensure competitiveness. At present, the steel industry has solved the issue of "quantity". The next important step to solve "structural" problems, including product structure, production capacity structure, distribution structure, organizational structure and technical structure. 56

57 (C) Mainline of Steel Industry Development in Accordance with the 13 th 5-Year Plan 1. Product Structural Adjustments To meet the requirements of national economic transformation and upgrading, outdated steel products should be eliminated as soon as possible. Ordinary products with a large variety and wide range shall be upgraded, and research and development efforts should be enhanced to address the constraints of supply shortage of high-end steel products. Product Structural Adjustment Elimination of Outdated Products Upgrade Large Variety, Wide-Range Products Products of outdated production technology with high-energy consumption, environmental non-compliance and poor product quality, such as rebar, hot-rolled silicon steel and ordinary hot-rolled narrow strips below Grade 3 Rebar: Promotion of high-strength steel and functional steel Wires: Strengthening the control of the diameter, shape and uniformity of the inclusions and improving the stability of product quality Section bars: Continuous, large-scale production to further reduce production costs and substantiate the series of specifications on offer Medium Plates: Promotion of high-strength sheets of grade Q390 or above, and low-cost production of refractory, all-weather building boards, high-strength low-alloy steel plates for machines of grade Q345 or above Cold-rolled and coated sheets: To increase the production proportion of high-quality thin-gauge products, to respond to the trends of timber minimization and low cost in the downstream industry; To enrich the variety of coated products, and develop functional coated board products Development of High-End Products Special steels, automobile panels, oriented silicon steels, energy pipes, anti-corrosion ships, new-type stainless steels and marine engineering steels, among others. 57

58 (C) Mainline of Steel Industry Development in Accordance with the 13 th 5-Year Plan 2. Output Structural Adjustment Intensify efforts to eliminate outdated production capacity, actively promote the coordinated development of efficient equipment, improve access mechanism for new steel construction (modification and expansion) projects, strengthen energy-saving and landsaving, environmental, technical and safety standards for market access. 3. Distribution Structural Adjustment Promotion of steel industry gradient transfer in an orderly manner, supporting regional capacity replacement, leading the domestic effective steel production capacity to advantageous businesses and a geographical distribution more conducive to comparative advantages 4. Organizational Structural Adjustment Encourage mergers and acquisitions of steel companies, develop of mixed ownership, actively promote corporate stocks reform, form social and public companies in line with the law of the market economy. 5. Technical Structural Adjustment Construction of a risk-and-profit-sharing promotion platform and coordination mechanism for the key common technologies for the steel industry, establish a user-oriented transformation system for technological innovation and results and further promote, localization and internationalization of steel technology and equipment innovation. 58

59 (D) Guiding Ideology, Basic Principles & Development Goals Guiding Ideology To seize the historic opportunity of a comprehensively deepening reform, to promote strategic economic restructuring to create a fair competitive market environment, to follow the development mainline of "Reform, Adjustment, Environmental Protection and Innovation", to focus on quality and efficiency in the optimization of products and services, to deepen energy conservation and reduce emissions, to realise innovation and development, to enhance the level of internationalisation, to optimize the organisational structure, to strengthen security of resources, etc. so as to steadily resolve conflicts arising from serious excess capacity, to accelerate and enhance international competitiveness, and to provide basic support for building a well-off society. 59

60 (D) Guiding Ideology, Basic Principles & Development Goals Basic Principles Adhere to Structural Adjustments Adhere to being Innovation-Driven Principle 1 Principle 2 Principle 3 Principle 4 Adhere to the Adhere to Green "Reform and Development Opening Up" Policy 60

61 (D) Guiding Ideology, Basic Principles & Development Goals Main Goals By 2020, the steel industry will fully meet the needs of the national economy and social development. The industry's core competitiveness and overall quality will have improved, and there will have been a new level of international development with innovation capacity being further enhanced, along with a marked improvement in operating efficiency. The coordination of resources, the environment, social and ecological development will basically be realized. A fair, regulated market environment will be initially built, forming a new pattern of differentiating development of enterprises with orderly competition. 61

62 (D) Guiding Ideology, Basic Principles & Development Goals Secondary Goals Resolving Serious Overcapacity Completing the task of reducing 80 million tons of steel production total capacity Total Size Domestic steel production and consumption will be around the peak value, with the total number developing and fluctuating within a certain range. The actual amount of domestic steel consumption is expected to be within the range of 720 to 770 million tons. Services & Products By 2020, China's steel industry service system and service capabilities will meet the needs of downstream industries, and move from the role of steel makers to user-centric service providers. A comprehensive upgrading of common products. Key steel products required will meet the demand for energy, transportation, marine engineering and high-end equipment manufacturing and other fields. Energy Conservation & Reduction of Emissions SO2 emissions per ton of steel for steel companies is below 0.8kg, smoke dust emissions per ton below 0.6kg and the amount of effluent discharged per ton of steel below 1.0m 3. The average energy consumption per ton of the industry shall be lower than 560kgce 62

63 (D) Guiding Ideology, Basic Principles & Development Goals Secondary Goals Organizational Structure & Corporate Construction Innovative Development By 2020, the number of steel companies with smelting capacity will have decreased. The goal is to build 3 to 5 world-class steel business groups, achieve an industry average labor productivity of 800 tons of steel / person year and 1500 tons of steel / person year for advanced companies. By 2020, establish and improve the steel industry key common technology platform for multistakeholder involvement, mutual benefit, and efficient operation. Build a number of research centers, laboratories and industry alliances. Industry-wide sales of new products will account for more than 20% of the main business income. Advanced R & D expenditure will represent more than 2.2% of the main business income. Protection of Resources By 2020, build a stable, efficient, varied and diversified resource security system. The proportion of mine rights will account for more than 20% of the total imported iron ore. A number of large iron ore bases will be built in China. Build an iron ore market price formation mechanism that is reasonable, transparent and that objectively reflects the supply and demand and long-term interests of all parties. Industrial Distribution Beijing, Tianjin, Hebei and the Yangtze River Delta are under great environmental stress and experience serious overcapacity in steel production. These prominent regional conflicts can be effectively reduced. Zhanjiang and Fangcheng, among other major productivity distribution projects, will be completed and operational. Form an industrial distribution that complies with the requirements of the environmental capacity, is close to the market and the efficient use of international and domestic resources. 63

64 (E) Development Priorities Market Development Application, Optimization of Products & Services (1) (4) Strengthening the Protection of Resources (2) Implementation of Innovative Developments (5) Optimization of Industrial & Organisational Structures Enhancement of Energy Conservation (3) Planning & Research Institute (MPI) 64

65 (E) Development Priorities Direction of Development Direction of Development (6) Optimization of the Structure of the Region's Steel & Iron Industry (7) Acceleration of Internationalization (8) Promotion of Marketization & Elimination of Outdated Practices & Products 65

66 5. MPI - Your Trusted Partner

67 MPI - Your Trusted Partner The State Council approved the MPI's establishment (1972) An SASAC affiliated institution First Batch of State-Approved Grade A Engineering Consulting Organizations A national consultancy specialising in development planning and the strategic study of China's metallurgical industry. We have strong professional and technical capacities with 90% of staff members holding Masters and Ph.D. degrees. Senior technicians account for 70% of the staff. Experts who enjoy special government allowances, state-registered consulting engineers and professor-level senior engineer account for 50% of the staff. Our areas of expertise covers geology, mining, mineral processing, smelting and processing, product further processing and the entire processes of other steel and nonferrous metals; business covers strategic planning, organizational control, human resources, efficient production, purchasing, sales, financial costs and other management improvement programs. We provide advantageous integrated "one-stop" technical and strategic and operational consulting services. 67

68 MPI - Your Trusted Partner 5 Aspects of Thinking for MPI Development Height Satisfaction Width Depth Speed Government Advisors To establish MPI as an authority in the domestic metallurgical industry and an internationally renown consulting agency. 68 Industry Development Leader Corporate Planning Think-tank

69 MPI's Selected Clients

70 MPI's Selected Clients

71 MPI - Your Trusted Partner Business Segments Technical Consulting: Master Plan Mineral Resources Steel Market Energy Saving Overall Logistics Non-Steel Industry Technical & Economic Management Consulting Conference Information: "Blue Paper on China's Steel Industry" Series Report Top Six High-End Forums Technology Promotion: Sintering Flue Gas Desulfurization, Contract Energy Management (Waste Heat Power Generation, Water Pump Energy- Saving, Coal Moisture Control, etc.), Technology Intermediaries Scope of Business Industry Policy Research & Interpretation Mineral Resources Development & Green Mine Planning Sintering Flue Gas Desulphurization Technology Services Metallurgical Industry Distribution, Planning & Research Industry & Industrial Park Planning Energy-Diagnosis & Energy-Saving Services Logistics Industry & Logistics Park Planning Preparation of Project Proposals, Application Reports & Feasibility Studies Economic Cycle Planning Industry & Enterprise Development Planning Asset Evaluation, Technical & Economic Assessments Promotion of Use of New Technologies Market Research Analysis and Forecasts Energy Conservation & Clean Production Planning Social Stability Risk Analysis & Assessment Planning of Industrial Chain Extension Preparation of Energy Assessment Report Enhancement of Human Resources Management Overall Development Strategy Corporate M & A Planning Organizational Control & Restructuring Financial Cost Analysis Pay Performance Management Efficient Production Marketing & Sales Management Purchasing Management Operational Management Organizing & Supporting Various Industry Conferences

72 MPI - Your Trusted Partner Scope of the Management Consulting Business Integrating the advantages of MPI's professional technology and management experience to provide systematic,professional and highly practical solutions for metallurgical enterprises Strategic Consulting Organizational Management Consulting Human Resource Consulting Marketing & Management Consulting Operational Management Consulting M & A Consulting Group overall strategy Iron & Steel Industry Overall Planning Functional Strategies Design of Diversified Strategies Strategic Planning of All Business Units Balanced Scorecard Management Design of Group Management & Control Systems Organizational Structure Design Design of Key Business Processes Design of Responsibilities & Authorities System Construction Human Resources Planning Recruitment System Design Competency Model Design Position Allocation Design Pay Performance Management System Executive Incentive Program Design Marketing Strategy Design Product Strategic Positioning Customer Relationship Management Marketing Channel Management Sales Team Management Market Research & Market Segmentation Research Operating Model Design Product Development Site Management Supply Chain Management Efficient Production System Design Design of Corporate M & A Strategy Restructuring Program Design M & A Scheme Design Corporate Governance Structure Design Investment & Financing Platform Design Analysis & Assessment of Investment Opportunities Financial Management Consulting Comprehensive Budget Management Design Cost-Saving System Design Risk Management System Design Internal Control System Design Financial Management Model Financial Analysis Management Design

73 MPI - Your Trusted Partner Tools/Methods Collection of Information & Materials Analysis & Conclusion Project Progress Consulting Projects Team Job Scope Report Submission / Implementation MPI Database MPI Library of Projects & Case Studies MPI Collaborative Database Internet Data Statistics Bureau Data International Advanced Management Concepts International Advanced Steel Business Management Experience Similar Business Case Studies Industry Experts Heads of Government Authorities at All Levels Related Business Executives University Management Experts Other External Information Providing the latest, most comprehensive and most reliable industry data, information and policy interpretation Learning from the most scientific, the most advanced and the most effective management philosophies and corporate experiences

74 MPI - Your Trusted Partner Blue Papers on China's Steel Industry "Steel Market Analysis & Forecasts - Annual and Quarterly Reports" "Long Products, Sheets & Pipe Products - Market Specialization Analysis Report" "Iron Ore, Coke, Non-Steel & Ferro-Alloy Materials - Market Specialization Analysis Report" Value-Added Information Services "Steel Industry Monthly Information Report" "Steel Market Daily News" "Steel Industry Observations"

75 Caring Leaders 75

76 Caring Leaders To move with the times To pioneer innovations To achieve new heights In commemoration of the 40 th Anniversary since the establishment of the Planning & Research Institute YUAN Baohua: Former Member of the Central Advisory Committee, Former Director of the State Economic Commission, Honorary President of the China Enterprise Confederation Yuan Baohua 76

77 Caring Leaders Scientific planning paves the way for Chinese steel development In celebration of the 40 th Anniversary of the China Metallurgical Industry Planning & Research Institute Xu Kuangdi Spring 2013 XU Kuangdi: Vice Chairman of the 10th CPPCC National Committee, Former President of Chinese Academy of Engineering, Chairman of the Chinese Society for Metals 77

78 Caring Leaders Scientific development drives the restructuring and upgrading of the steel industry Scientific innovations pave the way for new levels of achievement Zhang Guobao Spring 2013 ZHANG Guobao: Former Deputy Director of the National Development and Reform Commission, Former Director of the National Energy Bureau, Member of the 11th CPPCC National Committee, Deputy Director of the Economic Commission 78

79 Caring Leaders Comrade Xinchuang: Congratulations on the 40 th anniversary of the establishment of the Planning & Research Institute! May the Planning & Research Institute be at the forefront of the international steel industry, as the most influential and foremost authority in the metallurgical industry. May the Institute support the continual development of the Chinese steel industry and the rise of China! Wang Wanbing 16 Jan 2011 WANG Wanbin: Deputy Secretary- General of the 11th National People's Congress, Office Party Secretary 79

80 International Cooperation MPI Director LI Xinchuang and his teammates meet with Cameroonian Minister of Mining MPI Director LI Xinchuang and his teammates meet with Venezuelan Minister of Mining

81 International Cooperation President of the US company WSD discusses cooperation and exchanges with MPI MPI experts pay a visit to Guinea MPI Vice Director WANG Lijuan exchanges views with the Ministry of Energy & Mining of Cambodia

82 Thank You! MPI - Your Trusted Parner Address: lixinchuang@mpi1972.com 82