Steel companies’ profitability is improving, and smart manufacturing is set to become the trend.

According to a comprehensive report by China Securities Journal, at the 2016 (5th) China Steel Technology and Economics High-Level Forum—co-hosted recently by the Metallurgical Industry Planning & Research Institute and the Chinese Society for Metals—Qu Xiuli, Deputy Secretary-General of the China Iron and Steel Association, stated that the steel industry will intensify its efforts to resolve excess capacity, and the imbalance between market supply and demand will continue to improve.

　　Qu Xiuli stated that the profitability of steel enterprises has improved month by month, with monthly profits recorded in March and cumulative profits achieved by May, marking a gradual turnaround from losses to gains. Key factors behind this performance improvement through the first seven months include a rebound in steel prices, a narrowing decline in sales revenue, cost reductions that outpaced the drop in revenue, and a reduction in expenses—particularly financial expenses.

　　However, despite a modest recovery in industry profitability, market demand has not improved significantly. According to Zhao Pei, Secretary-General of the Chinese Society for Metals, apparent crude steel consumption has been on a downward trend month after month since the beginning of the year, with steel consumption in July down 3.6% year on year.

　　In this regard, Li Xinchuang, President of the Metallurgical Industry Planning & Research Institute, believes that personalization, customization, product variety, and small batch sizes will become the prevailing trends in steel producers’ manufacturing operations. Smart manufacturing is shifting the steel production model from mass production to mass customization. On the one hand, it will accelerate the transformation and upgrading of the steel industry, steering steel products toward the mid- to high-end segment; on the other hand, it can significantly enhance the quality and profitability of enterprises.