Dai Zhihao, General Manager of Baosteel Co., Ltd., predicted at the recent 2013 annual results online briefing that 2014 will be the first year the Chinese steel industry truly enters winter, and that a number of steel mills may exit the industry in the next three years.

　　Dai Zhihao believes that, from the current perspective, China's steel industry will continue to operate at thin margins in 2014, and the industry will remain in an adjustment phase for a relatively long period. The advancement of industrialization and urbanization will continue to support slight growth in domestic steel demand, but the oversupply situation caused by overcapacity and slowing downstream demand growth will be difficult to change in the short term. At the same time, high costs, homogeneous competition, and financialization trends will jointly constrain improvements in the steel industry's profitability.

　　Dai Zhihao pointed out that, given the actual situation of overall oversupply in the steel industry, the outlook may not be optimistic. However, as the public pays increasing attention to environmental issues, the state's determination to solve environmental problems, and the survival of the fittest in an increasingly competitive market, those steel enterprises that have consistently upheld social responsibility, focused on environmental protection investment, valued scientific research, and mastered unique leading products will actually find opportunities.

　　Currently, Baosteel Co., Ltd. is already ahead of domestic peers in profitability and product competitiveness. According to Baosteel's 2013 annual report, the company achieved a net profit attributable to shareholders of the listed company, after deducting non-recurring gains and losses, of 6.32 billion yuan for the year, up 43.1% year-on-year. In 2013, the company's sales revenue accounted for 5.15% of the steel industry's (large and medium-sized enterprises) sales revenue, while its profit accounted for 35%.

　　However, the company's stock price performance has not been ideal, and has even remained below net asset value for years. In response, Dai Zhihao believes that this is mainly due to the industry background in the current market environment. Nevertheless, the company is seriously conducting research on market value management, striving to demonstrate to the capital market characteristics and value that distinguish it from other companies in the industry. These include the current equity incentive plan and the asset management plan for core key personnel, which are among a series of market value management plans the company is considering and implementing.

　　According to the reporter's understanding, in the 2013-2018 plan that Baosteel Co., Ltd. has formulated and is implementing, three major transformation and upgrading strategies are clearly defined: from steel to materials, from manufacturing to services, and from China to global. This is to actively respond to the challenges of long-term adjustment in the steel industry.

　　According to Baosteel's plan, in the future it will form three major bases in Shanghai, Meishan, and Zhanjiang, with a production capacity of 34 million tons; focus on six strategic products: automotive, silicon steel, tinplate, petroleum and energy, shipbuilding and offshore engineering, and high-end thin plates, with total strategic product volume reaching more than 23 million tons; on the basis of strengthening its core steel business, it will also seize the opportunities of the vigorous development of the IT technology industry and the increasingly widespread and in-depth development of the Internet to vigorously develop the information technology industry and e-commerce, striving to form a business structure of "one body, two wings" with the core steel business as the "body" and IT technology and e-commerce as the "two wings," continuously enhancing the company's competitive strength.

　　Dai Zhihao disclosed that in 2013 the company completed the preliminary design of all unit projects of the Zhanjiang project and signed procurement contracts for main equipment. It has now entered the full construction stage, and the Zhanjiang steel project is expected to be fully completed and put into operation in September 2016.

　　In terms of new materials development, the company will mainly focus on two major areas: first, new high-end steel materials, such as advanced high-strength steel and oriented silicon steel, which represent the development direction of steel products; second, other non-steel materials around the needs of downstream customers, with the goal of supporting the company in becoming a competitive comprehensive solution provider. At present, Baosteel has accumulated extensive experience in technology research and development, product application, and customer service, which will help the company shorten the time required for new materials development.

　　In addition, Baosteel Co., Ltd. will also advance the layout of overseas steel production. Dai Zhihao stated that the company's international operation principle is to focus on the needs and development of strategic users, rely on Baosteel's core technology, combine with regional actual conditions, build system capabilities for overseas production, processing, and technical services, and gradually establish full-process overseas supply chain service capabilities to serve overseas strategic users well.