BEIJING, March 11, 2013 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), a leading non-state-owned steel producer in China, today announced its principal manufacturing facility, Shaanxi Longmen Iron and Steel Co., Ltd. ("Longmen Joint Venture") has begun construction of an additional continuous advanced-rebar-rolling production line.
The additional production line is expected to begin operations in the fourth quarter of 2013 and will expand Longmen Joint Venture's total annual continuous rebar rolling capacity by 1.2 million metric tons ("MMT"). With the continuous rolling capacity at the same facility in which steel billet is produced, Longmen Joint Venture expects to further eliminate intermediate transportation, re-heating costs, and outsourced-processing cost, thereby reducing overall unit production cost by up to RMB 70 per metric ton for the 1.2 MMT rebar rolling line. Once construction of the new rebar lines is completed, Longmen Joint Venture will have a total continuous rolling capacity of 4.3 MMT, including 3.3 MMT of rebar and 1.0 MMT of high-speed wire.
"The construction of additional rebar capacity to further reduce unit production cost is an extension of our operating philosophy adopted in 2012," said Henry Yu, Chairman and Chief Executive Officer of General Steel. "In reviewing our 2011 financial results, we learned that prices for raw materials did not decrease as fast as prices for steel, these dynamics had pressured gross margin for the entire industry, and along with the overall industry, we also incurred losses for the fourth quarter of 2011.
"Although 2011 profitability was disappointing, demand for steel products in General Steel's core Western China market remained solid, as our 2011 sales volume increased by 2.3 million metric tons, or 58.1% year-over-year, to 6.2 million metric tons. We believe that our geographic location in China's western region continues to provide us strong competitive advantages, and we have set sustainable growth and profitability as our top priority. We are glad to see an improving trend for China's steel industry in late 2012, which provides us with cautious optimism for 2013," Mr. Yu concluded.
John Chen, Chief Financial Officer of General Steel, added, "Despite the improving but still challenging environment, we believe it is essential to grow our business organically with a focus on improving production efficiencies and increasing operating leverage. To leverage the economic of scale, we reallocated two rolling lines, including one 1.2 MMT rebar line and one 1 MMT high-speed wire line, from our Maoming Hengda facility to Longmen Joint Venture. These two lines have been in commercial production in 2012 and we expect unit costs saving of up to RMB 40 per metric ton for each line. In addition, in September 2012, we started construction of another 0.9 MMT1 rebar rolling line at Longmen Joint Venture, with anticipated unit costs saving of up to RMB 100 per metric ton. We believe by continuous rolling rebar and high-speed wire where steel billet is produced, the eliminated intermediate production costs should incrementally contribute to our gross margin recovery."
Please refer to the press release the Company issued on September 19, 2012, with the title of "General Steel Begins Construction on Advanced Rebar Production Line at Longmen Joint Venture".
About General Steel Holdings, Inc.
General Steel Holdings, Inc., headquartered in Beijing, China, produces a variety of steel products including rebar, high-speed wire and spiral-weld pipe. The Company has operations in China's Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipalitywith seven million metric tons of crude steel production capacity under management. For more information, please visit www.gshi-steel.com.
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This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
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