Battered giants use non-core operations to ride out tough times

Chinese steel companies are managing to ride through the current tough times in the sector after having diversified into more lucrative businesses, said an industry official.

“Steel covers a wide range of industries, including minerals, recycling, logistics, environmental management, finance and steel processing, which provide a lot of options for the steel smelters,” said Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, on Saturday.

He said the non-steel businesses of the steel groups include high technology, waste gas utilization, real estate and finance.

In 2015, major steel companies reported 112.7 billion yuan ($16.64 billion) in losses from their main businesses. In comparison, their non-steel businesses brought in 48.1 billion yuan of profit.

Li suggested that their nonsteel businesses should be part of the steel smelters’ long-term strategic plans.

Li Bing, chief of the corporate reform office of the Stateowned Assets Supervision and Administration Commission, said that China’s urbanization would generate huge potential for steel demand.

He added that China’s urbanization rate, currently at 55.9 percent, was far lower than the average 70 percent among developed countries.

“As urbanization deepens, the potential demand will drive up the industries in the various sectors.”