According to Su Changyong, deputy secretary-general of CISA and director of CISA’s international cooperation department, speaking at the Asian Steel Forum held at Beijing on July 16, the 15th Five-Year Plan period is critical for China’s steel industry to solidify its global standing and enhance competitiveness.
China’s 15th Five-Year Plan calls for the upgrading of key industries and the strengthening of the global position and competitiveness of the mining, metallurgy, machinery, shipbuilding, construction sectors and others.
As a pillar of the national economy and a key driver of industrial stability, Mr. Su said China’s steel sector currently faces oversupply and weak effective demand, constituting the main challenge to the sector’s quality and profitability. Thus, the goal is to secure industrial returns, balance supply-demand fundamentals, optimize industry structure, strengthen effective supply, as well as implement low carbon and digital transformation. Consequently, promoting international growth is regarded as an important method.
The overall approaches for the internationalization of China’s steel industry are prioritizing outbound investment, using investments to drive comprehensive exports of technology, equipment, standards and management; geographically, focusing on developing markets along the Belt and Road, while also pursuing opportunities in developed markets; while internationalization must serve China’s overall steel development strategy and balance both domestic and overseas markets.
There are three key areas: coordinating outbound investment and steel exports with the shared goal of stabilizing and expanding China’s global steel market share; coordinating among domestic enterprises to avoid cutthroat competition and promote collective overseas expansion; and coordinating with host-country governments and enterprises to ensure effective localization.
The basic principles of the Chinese steel industry’s globalization include keeping enterprises as the lead and remaining market-oriented; focusing on results and mutual benefits; encouraging competitive firms and advanced capacity to go abroad, and strengthening coordination and orderly implementation.
The main objectives of Chinese steel industry’s globalization are accelerating the transformation of and upgrading the country’s steel industry, enabling it to take the lead among industrial sectors in making the shift from quantitative expansion to qualitative excellence, and embarking on a path of high-quality development; promoting the optimization of the global footprint of China’s steel industry, significantly raising the globalization level of steel enterprises, and establishing a stable, reliable and efficient global system covering resource supply, steel production and product marketing, enhancing the position of China’s steel industry in the international division of labor and increasing the global reputation of “China Steel” in the international market.
There are several challenges facing the internationalization of China’s steel industry, including the lack of systematic research, planning and coordination at both the national and industry levels; the return of steel products from overseas steel mills invested in by Chinese companies, which intensifies competitive pressure in China’s domestic steel market; high import tariffs imposed on steel processing facilities built overseas that rely on semi-finished products shipped from China; project financing difficulties; and religious and cultural differences along the Belt and Road.
For steel enterprises, the primary objectives of internationalization are threefold: securing access to resources, expanding market presence, and acquiring or transferring technology, management expertise and other capabilities.
Steel enterprises could enhance resource security by establishing or acquiring overseas metallurgical mining assets. To secure raw material supplies, steel companies are advised to invest overseas - either independently or through joint ventures - to acquire mining rights and develop, construct and operate mining projects.
Steel enterprises could expand their market presence by establishing or acquiring overseas integrated steel plants, setting up or purchasing production lines for specific steel products, and developing overseas processing and distribution centers. In addition, building overseas steel industrial parks could further support their international expansion.
Meanwhile, establishing a cross-border intelligent steel warehousing and e-commerce platform would help boost and stabilize China’s steel exports.
Currently, China’s overseas steel capacity approximately amounts to 30 million mt (around 28-32 million mt). In the future, it will be possible to reach 50-60 million mt.
