Iron and Steel Enterprise: A New Army into the Automotive Parts Industry

According to the data provided by the China Iron and Steel Association, in the first half of this year, the domestic average sales profit rate of large and medium-sized steel companies was only 0.13%, ranking the last in the national industrial sector. The actual integrated domestic steel production capacity is about 976 million tons. According to the statistics, the output of crude steel is 731 million tons, and the capacity utilization rate is only 74.9%.

The two issues of overcapacity and elimination of outdated production capacity have been “accompanied by” with domestic steel companies. What is the breakthrough in alleviating excess production capacity and eliminating backward production capacity? Concerned about the news of the recent period is not difficult to find, the domestic mainstream steel companies have turned to automotive steel and auto parts business.

Steel companies seek breakthroughs

All along, the steel industry and the automotive industry are in an upstream and downstream relationship. The fact that steel companies are involved in the automotive industry is seen by many in the industry as seeking more profit growth, which is one of the means to reverse the current state of the steel industry. Liu Ming, chief researcher of the Economic Information Center of the National Information Center, said that the iron and steel industry has established strategic cooperative relations with auto companies in recent years, and the development of auto parts business is an integration of upstream and downstream relationships. The rapid development of the automotive industry in recent years has resulted in the steel industry. The favor.

Li Xinchuang, the deputy secretary-general of the China Iron and Steel Association, had previously revealed to the media that China Iron & Steel Association had a loss of 35 of the 86 member companies with a loss of 40.7%. In particular, in June this year, due to the drop in steel prices, the member companies of the China Iron and Steel Association lost a total of 699 million yuan, which was the first industry loss this year.

On the one hand, the domestic auto industry still maintains a relatively high growth rate. On the other hand, it is a loss in the steel industry. However, production capacity has risen instead of falling. It is obvious that the steel industry hopes to invest in the automotive industry for more profit. Therefore, we have seen that in recent years, domestic steel companies have turned to the automotive sector, either jointly with automakers to build production lines, or take high-end routes to produce specialty steels for automobiles.

Upstream and downstream integration will become a trend

In recent years, the means adopted by steel companies to enter the automotive industry have been largely the same. First, foreign advanced technology was introduced, followed by cooperation with automotive companies, the establishment of production lines, and the establishment of long-term goals.

Upstream and downstream cooperation between iron and steel companies and auto companies is convenient, and closer cooperation will benefit both parties. From the recent cooperation between steel companies and auto companies, many companies have had years of working together before they formally established cooperative relationships.

For example, the cooperation between Wuhan Iron and Steel and Chery, as early as in 2007, Wuhan Iron and Steel and Chery have established a strategic cooperative relationship; in 2009, Wuhan Iron and Steel and Chery jointly built 800,000 automotive steel distribution center; last year, Wuhan Iron and Steel acquired ThyssenKrupp's laser welding The Group intends to develop the steel deep-processing business; Wugang has been awarded the title of Chery Outstanding Supplier.

This time, Wuhan Iron & Steel and Chery built auto parts production bases to further deepen cooperation. The person in charge of WISCO told the media that this time WISCO adopted a joint venture to establish a joint venture with Chery to establish a production base for auto parts. It mainly produces auto stamping parts. With the introduction of laser welding technology by Wuhan Iron and Steel, Wuhan Iron & Steel will make breakthroughs in the auto parts sector. It will also be possible to invest in OEMs in the future. Before Wuhan Iron & Steel and Chery established auto parts production base, in 2010, Jingxi Heavy Industry under Shougang started a car shock absorber project in Beijing Fangshan with a total investment of RMB 2 billion. Once insiders told reporters that Shougang has always been interested in expanding its share of automotive products. After Jingxi Heavy Industry acquired Delphi shock absorber and brake products business in 2009, it began to realize industrialization. Annual output of Jingxi Heavy Industry in 2011 4 million shock absorber factories are put into mass production.

The occupation of high-end automotive steel products market is another measure for steel companies to enter the automotive sector. As a high-end steel product produced by the steel industry, automotive steel has stringent requirements for strength and weight. According to the reporter's understanding, the domestic auto steel plate imports each year amounted to 2 million tons, while the auto steel plate with high strength and light weight is still a short production board for domestic iron and steel enterprises. To this end, Valin Steel and other companies began to introduce high-end automotive steel plate production technology to fill the gaps in domestic steel products.

In 2008, Valin Steel formally established a cooperative relationship with ArcelorMittal to establish a high-end automotive steel plate production company, Valin ArcelorMittal Automotive Plate Co., Ltd. in China. According to Wang Jun, Chairman of Valin ArcelorMittal Automotive Plate Co., Ltd., it is currently not possible to produce high-strength, lightweight automotive steel plates. The introduction of high-end automotive steel plates is intended to meet the needs of domestic auto manufacturers. He said that in the future, steel companies will play a more important role in the automotive industry and will be integrated into the automotive R&D work.

According to industry sources, the integration of steel companies and the automotive industry will become a trend in the future. Iron and steel enterprises urgently need to reverse the situation, solve excess production capacity and increase profits, while automotive companies need more stable raw material pricing and high-quality steel products.