Taiyuan Iron & Steel takes the value-added path to profits

Employees work at the production line inside the stainless steel industrial park of Taiyuan Iron & Steel (Group) Co Ltd. With an annual production capacity of 10 million tons, the company has distinguished itself from competitors with advanced technology.[Photo/Xinhua]

T aiyuan Iron & Steel (Group) Co Ltd, China's largest stainless steel smelter by output, is banking on high-tech products to turn the tide amid an industry slowdown.

While the rest of the Chinese steel producers are grappling with falling prices and rising trade disputes, TISCO, with an annual production capacity of 10 million metric tons, is making waves at home and abroad with its advanced technologies.

In overseas market, the company has enjoyed success with its value-added products like high-grade pipeline steel, duplex stainless steel and hot rolled coils. These products are being increasingly used for oil pipelines, sea water desalination and LNG ship construction.

Han Yi, assistant to the marketing director at TISCO, said that last year, high-tech products, steel for train compartments and ultra-pure ferrite stainless steel exports perked up considerably. Exports to countries in North America, Europe and Asia increased significantly, he said.

In November, TISCO won the bid for supplying twisted steel for the Temburong ocean bridge in Brunei. It was also the first time that the company successfully exported its indigenous twisted steel, with excellent anti-corrosive properties, high density, low weight, minimal maintenance and longer durability.

To further tap into the overseas market, TISCO signed a partnership agreement with China Minmetals Corp in October, a major metals and minerals trading company.

Li Xiaobo, chairman of TISCO, said that the two companies, as leaders in their respective fields, had a lot of business overlaps and hence decided to team up to tackle the current industrial challenges. The two sides are planning tie-ups in logistics, e-commerce, overseas resources and on sales channels, he said.

In 2014, TISCO achieved steel output of 10.73 million tons and net profit of 200 million yuan ($31 million). Its target for 2015 is 11 million tons of steel output and 500 million yuan in net profit.

"The steel industry overcapacity is mostly in low-end products such as crude steel," said Chen Ziqi, deputy director of the metallurgical and building material department of China International Engineering Consulting Corp.

"There is always demand for high-tech products. In the long run, China's going global efforts, such as the Belt and Road Initiative and the export of its infrastructure construction technologies and products will create new opportunities for iron and steel companies," Chen added.

The Belt and Road Initiative refers to the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

On the domestic front, TISCO has been supplying axle steel for China's high-speed trains, which require top quality parts to guarantee fast speeds.

"The faster the train runs, the more solid the axle has to be to resist the strong impact and twists," said Wang Yuling, chief researcher of the technological center. "The axle partly sustains the whole weight of the train. Therefore it must be made of hard material."

In 2007, the technological center achieved a major technological breakthrough in axles for high-speed trains. These axles have been installed in high speed trains running in China and in those exported.

"Our company's axle steel is ranked numero uno in terms of quality. Nine out of 10 car axles in China are made out of steel produced by our company," said Wang.

The research center employs 500 people and owns more than 2,000 patents. In the center, more than 40 research teams are working to resolve the most difficult technological obstacles, encompassing stainless steel, military steel and aerospace steel.

"We update our technological innovation plans every year to cater to the country's most urgent needs, such as the Belt and Road projects and the national ocean projects such as the construction of ocean bridges and marine facilities," said Li Jianmin, director of the technological center.

"In times of difficulty, there's always hope for growth," said Li Xinchuang, director of the China Metallurgical Industry Planning and Research Institute.

"China's overcapacity in iron and steel production is not that desperate. To some extent, it prompts the market players to explore higher value added products to distinguish themselves amid severe competition. The key factor is to increase the technological value of the products so that they are irreplaceable."