The profit contribution from CITIC Pacific Special Steel
declined 28% compared with 2007, primarily due to the
challenging operating environment in the latter part of
2008. During this period, all three plants experienced
a sharp decline in product price, but were using raw
materials purchased earlier in the year at high cost.
Another major factor accounting for the decrease in
profit contribution was a provision of HK$513 million
against year-end inventory.
Special Steel Production
Our three special steel plants employ two different
technological approaches: long and short processes.
The long process uses iron ore and coke as raw
materials. The short process uses scrap steel, pig iron or
molten iron as raw materials. During the next phase,
alloys are added to the molten steel produced from these
processes. Through an ‘LF’ ladle refining furnace, an
‘RH’ or vacuum degassing furnace, and a continuous
casting and rolling process, steel billets are produced
and shaped to various specifications according to
customers’ specific requirements. The management
teams at the plants are focused on cost efficiency and
product quality, and will therefore choose whichever one
of the processes that has lower raw material input costs.