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Industry

Digital transformation injects impetus to China's listed steel companies

June 18, 2020


Abstract : The listed steel companies in China have recently witnessed excellent performance on the domestic stock market as many analysts believe the digital transformation has injected an impetus to their development, the Xinhua-run Shanghai Securities News reported on Thursday.

BEIJING, June 18 (Xinhua) -- The listed steel companies in China have recently witnessed excellent performance on the domestic stock market as many analysts believe the digital transformation has injected an impetus to their development, the Xinhua-run Shanghai Securities News reported on Thursday. 

On Wednesday, the steel sector survey index compiled by SWS Research closed higher by 2.36 percent. Chongqing Iron & Steel Company Limited (601005.SH) and Nanjing Iron & Steel Co., Ltd. (600282.SH) surged by the daily limit of 10 percent. Citic Pacific Special Steel Group Co., Ltd (000708.SZ) closed up by 7.7 percent.

Industry insiders are optimistic about the performance of the steel industry on expected appreciation of steel stocks thanks to expanding digital business and foreseeable domestic steel demand in the second half of the year.

In fact, some traditional industries such as steel industry are gradually transforming themselves into digital technology-driven ones. 

For example, Hangzhou Iron & Steel Co.,Ltd. (600126.SH), Jiangsu Shagang Co., Ltd (002075.SZ) and Maanshan Iron & Steel Company Limited (600808.SH) have set foot in the Internet Data Center (IDC) business. 

According to the annual report of Hangzhou Iron & Steel for 2019, it is eyeing the digital business and investing in the IDC business. It has acquired a cloud computing company and was building the IDC project. 

Jiangsu Shagang is also actively promoting major asset restructuring and focusing on investment in the IDC business. 

Nanjing Iron & Steel has recently cooperated with Huawei to introduce the integrated product development (IPD) system to promote its development as a high-tech enterprise.

Industry insiders believe that potential opportunities of the digital transformation are one of the important reasons for the surge in steel shares.

As for steel sector performance, the market as a whole is optimistic about domestic steel demand this year, said Wang Guoqing, director of the Lange Steel Information Research Center.

However, the steel industry is also facing some potential pressure. From the perspective of raw materials, prices of iron ore kept rising since this year, exacerbating the production costs. Data shows that the most active iron ore contract for September delivery trading at the Dalian Commodity Exchange (DCE) has risen by 27.64 percent since the beginning of the year.  

In the short term, steel prices are mainly supported by costs, and the iron ore prices remain high, and coke prices have also risen successively, but steel companies still have a profit of 200 to 300 yuan per tonne, according to Sun Hui, director of the Research Center of the Xiben New Line Stock, a commodity information provider in China. (Edited by Hu Pingchao with Xinhua Silk Road, hupingchao@xinhua.org)

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Keyword: steel industry digital transformation

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