I. Main business of the company during the reporting period

1. The company belongs to the iron and steel industry, and its main business scope includes: iron and steel smelting, steel rolling and extension processing; sinter, coke, chemical products manufacturing and sales; blast furnace residual pressure power generation and gas production and sales; waste and foreign matter processing and sales in the industrial production; sales of metal materials, coke, chemical products, machinery and electric equipment, and construction materials; equipment leasing (except automobiles); storage services; technological development, technological consultation, technological transfer, technological services, and technological training; investment and investment management.

2. The iron and steel products of Qianshun Base (including Qian’an Iron and Steel Company, Cold Rolled Sheet Company and Zhixin Company) include two kinds of plate products: hot rolled and cold rolled products. The hot rolled products are characterized by pipeline steel, container steel, high-strength steel, auto structural steel, sawblade steel and pickling plates; the cold rolled products are mainly composed of auto sheet, silicon steel, household appliances plates and special plates. Zhixin Company was founded in March 2018, formerly the Silicon Steel Division. Its main business scope includes: cold rolled electric steel sheet belt manufacturing; metallurgical equipment manufacturing; motor manufacturing; transmission and control equipment manufacturing; energy-saving technology promotion services, and new material technology promotion services. The company is a R&D, manufacturing and sales base for cold rolled electric steel products, with a complete integrated process of “production, marketing and research”, focusing on promoting the production, sales and R&D of steel for new energy auto motors, high-end frequency conversion compressors, ultra-efficient motors, first-level energy-efficient transformers, ultra-high voltage and other fields. The iron and steel products of Jingtang Base include hot and cold plate products. The hot rolled products are characterized by pipeline steel, container steel, high-strength steel, auto structural steel, and medium and thick sheet; the cold rolled products are mainly composed of auto sheet, household appliances plates, special plates, tin plates and color-coated plates.

3. The main uses of iron and steel products include: pipeline steel is mainly used for the transportation of oil, natural gas and other media. High-strength steel includes steel for high-strength construction machinery, explosion-proof steel for safe and ATM, steel for fan, steel for carriage of truck, etc., which is mainly used to manufacture crane arms, body and girder of cranes, pump trucks, special trucks and other vehicles, blade of blowers, mine fans and electric fans, etc. Weathering steel mainly includes container steel, mixing tank steel and power tower steel. Auto structural steel mainly includes auto wheel steel and auto frame steel, which is used to manufacture the wheels of cars, buses, trucks, construction machinery, agricultural vehicles and other vehicles, as well as crossbeams, longitudinal beams and other structures of various auto frames. Hot rolled special sheets mainly include welded cylinder steel, boiler and pressure vessel steel. They can be used to manufacture containers containing liquefied petroleum gas, liquid nitrogen, etc. and pressure-bearing equipment for special equipment. Hot rolled pickling sheet is mainly used in auto, compressors, motorcycles, machinery manufacturing, hardware accessories, etc. Cold rolled auto sheet is mainly used for auto inner and outer sheets, spare parts and so on. Silicon steel is mainly used in the motor and transformer manufacturing industry. Household appliances plates is mainly used for refrigerators, washing machines, air conditioners, television sets, internal and external plates of small household appliances, structural sheets, etc. Special cold rolled sheets include chain steel, enamel steel, container steel, welding wire steel, barrel steel, motorcycle standard parts, etc. Tin plates are mainly used in the food industry to make various containers, stamping products, packaging materials and so on. Color-coated plates are widely used in the construction industry, shipbuilding industry, vehicle manufacturing industry, furniture industry and so on. Medium and thick sheets mainly include bridge steel, shipbuilding and marine steel, pipeline steel, wind power steel, high construction and Z-direction steel, construction machinery steel, container plates, storage tanks and hydropower steel, etc. They’re widely used in energy, shipbuilding and offshore platforms, machinery manufacturing, bridge construction, transportation, power engineering and other industries.

II. Overview of business performance

In 2018, due to the continuous advance of structural reform on the supply side, the strong market demand and other factors, the annual average price of steel products ran at a high level, and the benefit of the steel industry reached a high level. The company grasped the favorable market opportunity, strengthened the strategic fixed force of survival and striving for development, continuously enhanced operation control, persisted in reform and innovation, and took a solid step in the new journey of high-quality development.

The company’s main accounting data and financial indicators are as follows: operating income 65.777 billion yuan, an increase of 9.18% over the same period;total profit 3.159 billion yuan,a decrease of 5.55% overthe same period;net profit of shareholders belonging to listed companies 2.404 billion yuan, an increase of 8.73% over the same period;earnings per share 0.45 yuan, total assets 135.106 billion yuan, equity of shareholders belonging to listed companies 25.348 billion yuan.

The company’s main product output: Qian’an Iron and Steel Company (including Zhixin Company): 6.89 million tons of iron, down 7.1% over the same period; 7.41 million tons of steel, down 1.2% over the same period; 7.01 million tons of steel products (including 1.76 million tons of steel products to the Cold Rolled Sheet Company), down 1.7% over the same period. The Cold Rolled Sheet Company: 1.78 million tons of cold rolled plates, an increase of 1.1% over the same period. Jingtang Company: 7.55 million tons of iron, down 9.5% over the same period, 8.14 million tons of steel, down 2.3% over the same period, 7.7 million tons of steel products, up 3.2% over the same period.

III. The company’s development strategy in 2019

Shougang adheres to the theme of promoting high-quality development and innovative development of the enterprise, and continuously deepens the reform of corporate governance structure and market-oriented mechanism around the core task of “promoting vitality, enhancing competitiveness, winning the battle for survival and development”; adheres to the development strategy of innovation orientation and “quality + service”, and revolves around green manufacturing, intelligent manufacturing, quality manufacturing, lean manufacturing, and accurate service to continuously enhance the core competitiveness of “manufacturing + service”; insists on accelerating the development of high-end products focusing on auto sheets, electric steel, tin plates, etc., to realize the transformation from a product manufacturer to an integrated service provider; insists on improving the profitability and capital operation ability of the enterprise in an all-round way, and strives to make it into a large, comprehensive and related diversified excellent listed company with world competitiveness.

IV. 2019 iron and steel production plan

Major products output: (1) Qian’an Iron and Steel Company: 7.69 million tons of iron; 8.09 million tons of steel; 7.45 million tons of steel products. (2) Zhixin Company: 1.6 million tons of electric steel. (3) The Cold Rolled Sheet Company: 1.7 million tons of cold rolled plates. (4) Jingtang Company: 7.22 million tons of iron; 8.75 million tons of steel; 8.18 million tons of steel products.