Lin Tao: Self-discipline and production control to "counter involution" are effective measures to stabilize the market
In the long run, the steel industry's profits have been repaired, but the sustainability is still insufficient. The strong supply capacity and weakening demand intensity remain the main contradictions in the current steel market. Self-discipline and production control to 'counter involution' are effective measures to stabilize the market. Steel Market Situation
Industry profit recovery benefits from low inventory and improved risk resistance
In the first half of 2025, the steel enterprises under the China Iron and Steel Association's key statistics achieved a total profit of 59.2 billion yuan, a year-on-year increase of 63.26%.
“The improvement in the profitability of the steel industry in the first half of the year is mainly due to two key factors.” Lin Tao pointed out, “Firstly, Rebar The alternation of old and new national standards has reduced the social inventory of steel, laying the foundation for this year's market conditions. Secondly, enterprises have accumulated valuable experience in dealing with extreme market fluctuations, such as significantly improving their risk resistance by precisely controlling raw material inventories and optimizing sales strategies.”
Bingsteel successfully avoided the risk of market price declines by cleverly using pre-sale strategies. “We lock in the future output at a reasonable price for downstream customers,” Lin Tao introduced. “Currently, pre-sale business is mainly divided into two forms: pre-sale of export orders and forward delivery of industrial materials. In export business, foreign merchants mostly adopt forward order mode, which has become an important channel for the company's pre-sale business; in industrial materials, for customers who can accept forward delivery, the company provides competitive prices through accurate order assessment, realizing large-scale pre-sales. In the first half of the year, the effective implementation of the pre-sale strategy became one of the key factors for the company to cope with market changes.”
Self-discipline and production control to 'counter involution' are effective measures to stabilize the market
Lin Tao pointed out that the current steel market faces the challenges of strong supply and weak demand, which is not conducive to Steel prices Stable operation. From historical experience, if each enterprise can reduce its output by 1% to 2%, it is expected to achieve a more ideal market stabilization effect.
“Profit is the fundamental goal of enterprises, but increased output does not equate to improved profitability. Some enterprises adopt low-price competition strategies to seize market share, which seriously harms the healthy and sustainable development of the industry,” Lin Tao stressed. “Currently, the national call for 'counter involution' is growing, and the concept of enterprises must be accelerated. In the past, the scale of enterprises was often regarded as an important indicator of competitiveness, and some enterprises were overly keen on scale expansion. For example, in the supply-side structural reform in 2016, the crackdown on 'earth-made steel' was effective. However, many enterprises reinvested their profits into expanding their scale. In response to this situation, the industry is actively calling for the orderly withdrawal of backward production capacity, rather than continuous capacity trading. To this end, relevant departments are further improving the capacity replacement policy. Promoting the orderly withdrawal of backward production capacity is an effective way to alleviate the industry's 'involution'.”
In addition, Lin Tao believes that there is still considerable room for development on the demand side. “In the past, the steel industry was profitable, and enterprises paid insufficient attention to the needs of downstream users,” he analyzed. “As the downward pressure on the industry increases, enterprises will pay more attention to downstream users, and are expected to develop more new demand points.”
Leveraging a larger market with a 'user-centric' approach
Against the backdrop of strong supply and weak demand in the industry, when discussing Bingsteel's business philosophy, Lin Tao emphasized the importance of a 'user-centric' approach.
“Taking the transformation of Bingsteel's building materials business as an example, the company initially relied mainly on the dealer model, with less interaction with customers,” Lin Tao recalled. “Since 2021, we have increased the construction of direct sales channels, and currently the direct sales ratio of the building materials sector has reached nearly 90%. Through the direct sales model, the company's contact with customers is closer, and it can more directly and deeply understand customer needs, covering all aspects from product quality to loading specifications, warranty certificates, and logistics transportation. Through the direct sales model, we have identified customers with higher quality requirements. Usually, these customers with higher requirements have stricter product standards, but they can also bring us higher profit per ton of steel. Therefore, through direct interaction with customers, we have selected higher-quality customers, and these high-quality customers have also prompted us to continuously improve product grades, and even explore new market opportunities.” Currently, Bingsteel's products have gradually expanded from the traditional real estate construction field to high-end markets such as high-speed rail, bridges and roads, and nuclear power.
Next, Bingsteel plans to gradually transform from ordinary steel to high-quality steel. In the process of transformation, closeness to users is equally important. “The sales of steel are subject to radius restrictions, and we initially positioned the market within a radius of 300 kilometers. Within this range, we conduct in-depth analysis of the surrounding industrial material needs. For example, Bingsteel is adjacent to Rizhao City, with a logistics radius of only tens of kilometers, and the annual demand for welding steel in this region is nearly 700,000 tons. Therefore, the company's next positioning in the welding steel business should at least meet the demand for welding steel in Rizhao City,” Lin Tao said.
In addition, Bingsteel also hopes to achieve in-depth cooperation with customers through industrial chain cooperation. Lin Tao said that the company's coastal industrial park is continuously promoting investment attraction, and Bingsteel hopes to play the role of 'chain leader', inviting more customers to enter the park, sharing energy, co-creating research and development, and jointly expanding the market to achieve win-win results.
Digitalization is a crucial capability reserve in the enterprise's strategic layout
Lin Tao regards digitalization as a key point for enterprise development.
In recent years, Bingsteel has taken the goal of a full-process intelligent factory, building a unified industrial Internet platform for the entire factory, extending digitalization to every process, covering all elements, and connecting the entire process. It continuously iterates and dynamically upgrades on a unified base, building a self-evolving intelligent manufacturing new ecosystem, making cost reduction and efficiency improvement and operational optimization the norm.
“Through a series of digital measures, Bingsteel has achieved data non-landing and the construction of basic AI models. This has played a positive role in promoting the company's cost reduction and efficiency improvement and decision-making ability,” Lin Tao said. “In the field of digital construction, enterprises need to make long-term investments. This is because digital work is highly difficult, from the construction of basic digital infrastructure, to data governance work after collecting massive data, to the construction of various upper-level models, and to exploring and applying the currently popular large AI models, all need to be promoted step by step. At present, there is still a certain gap between achieving true intelligent manufacturing. For Bingsteel, from digitalization to intelligence, we are always on the road.”
In Lin Tao's view, AI will inevitably bring about earth-shattering changes to the industry. "Digitalization itself belongs to the category of new productive forces, and if it can be organically combined with AI, it will undoubtedly be like a tiger with wings added. In the future, digital capabilities and the ability to empower with AI will become essential skills for steel enterprises to survive and develop in fierce market competition. Enterprises lacking this ability will eventually be ruthlessly eliminated by the market. Therefore, this is undoubtedly a crucial capability reserve in the enterprise's strategic layout." Lin Tao pointed out.
"Currently, the development of the steel industry has entered a critical stage of 'adjustment, reform, breakthrough, and rebirth', and steel enterprises should change their thinking and not overly focus on scale expansion, but instead concentrate their efforts on improving their core competitiveness." Lin Tao concluded.
