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Baowu’s Ouyeel welcomes new steel mills as investors

Ouyeel, a Shanghai-based steel e-trading platform incorporated and managed by China Baowu Steel Group Co, has successfully convinced more Chinese steel mills to join as business partners, Mysteel Global understands from an Ouyeel post on June 27.

A total of eight new investors committed themselves to an injection of over Yuan 2 billion ($291.5 million) to the trading platform, among which are CITIC Capital, TISCO Venture Capital Co, Beijing Jianlong Heavy Industry Group, and Guangxi Shenglong Metallurgical Co, according to the post.

The new move has enabled Ouyeel to further enrich its steel mill shareholders from the original few including Baowu, Baoshan Iron & Steel Co (Baosteel), Shanghai Baosteel International Economic & Trading Co, and Benxi Steel Group, Mysteel Global understands.

The injection of new funding will facilitate Ouyeel's efforts to get listed on the Shenzhen Stock Exchange as a company with innovation in technology and business operations, a Baowu official with the knowledge of the matter commented briefly.

With the latest financing, “Ouyeel has further diversified the composition of its shareholders, with the business scope now extending to raw material processing, steel production, logistics and financing, which will form a close circuit of steel business,” a Shanghai-based steel analyst commented, noting that Sinotrans, also among the eight new shareholders, is a leading logistics service provider.

Baowu has long planned to grow Ouyeel into a third-party e-trading service provider for Chinese steel producers and list it on the domestic stock market when it founded the company back in 2015, Mysteel Global understands.

The investment in Ouyeel is also part of Baowu’s efforts to evolve itself from a steel producer to a conglomerate that spread out to all steel-related business, becoming a steel solution provider including steel and raw material trading, financing, warehousing, further processing and logistics services.

E-commerce has become a growing trend even in China’s steel industry, as this will be helping with better service to all downstream uses, cost effectiveness and market transparency, market sources agreed.

Nevertheless, the existing established steel e-trading platforms in China, limited in number, only accounts for a very small proportion of China’s steel trading, and the new business model “will co-exist with traditional steel trading for a very long time”, according to the Baowu official.

In 2018, Ouyeel sold a total of 15.4 million tonnes of steel products, with about 82% being sold by Chinese steel mills, while China’s apparent steel consumption was estimated at 870 million tonnes.  

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Hongmei Li, li.hongmei@mysteel.com