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How to reduce the cost,improve profits and enhance the competitiveness? which is one of key points for the steel industry in the background of raw material iron ore price crazy up and lower profit.The three big mine controllers terminate the annual bench market price invariably from 2008,and adopt the quarterly price index,which drive up the steel companies’cost much more than before.Meantime, some iron ore suppliers impose or raise iron ore export duty to increase their countrys’the supply quantity. And, it is very difficult for the numerous domestic steel companies to reach a consensus in the process of price negotiation form self interest, which lead to the failure in the every years bench market price negotiation directly. Besides, all the domestic steel companies have many differences, such as, geographically dispersed, capital capacity, firm size, which are good advantages for the iron ore suppliers to raise the price arbitrarily. Besides, because of the surplus steel production capacity and protecting our living environment, the Chinese government cut down the tax rebates on the low add valued steel products, increased the intensity of the steel industry consolidation esp., the state owned enterprises combine some private companies strongly. So, as a middle private steel company, if DL want to avoid to be eliminated by the market or the fate of the merger, he must expand the production scale and improve the competitiveness of enterprises.But, DL is subjected to the conditions, such as equipment and production technology and other factors, it is impossible to upgrade the products in a short time, so, it is the only shortcut to reduce the effective cost to increase the competitiveness of enterprises, to highlights the product’s price advantage.Based on the competitors and DL’s internal environment analysis, if DL want to reduce costs and increase benefits, he must change the purchasing patterns, improve the logistics system, adjust the production process and the use of blast furnace by products recycling .DL Company’s specific reducing cost and increasing efficiency of the measures including: first, purchasing, the article emphasizes the key points to reduce the cost ,such as increasing the stable supply quantity ,increasing the investment of domestic and foreign mines, adopting flexible purchasing methods and involving in iron ore financial sectors. Besides, as a buyer, he must mind many details when negotiating the purchase contract, to guarantee the buyer’s benefit ,such as reject limited on the chemical compositions, bonus and penalty terms,base on the CIQ results,reduce the first payment amount,terms of discharge. And, it is also one important method reducing the risk to enhance the staff training. Second, about logistic,suggest DL company to build his land and water transport systems and to strengthen the management and control of logistics systems.Third, in the production process, the article suggests DL company to adopt the principle of concentrate, optimize the way the production process to reduce energy consumption, increase production, recycling, save energy and protect the environment.
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