A PESTLE Analysis on Baosteel

PESTEL
Political

Baosteel
The most important market China,
significantly subject to Chinas policies, like the
closure of obsolete steel mills in China
Global business, selling about 15% of steel
products in international markets, thus also
subject to policies of other countries than China
As a large leading state-owned steelmaker,
Chinas government can potentially
disproportionately affects Baosteels
management and pricing policies
Chinas government encourages steel industry
consolidation, currently letting Baosteel acquire
a weaker competitor Wuhan Steel, which is
however mostly driven by political as well as
economic purpose
Pressure to protect employment and reduce
carbon dioxide emission

Economic

Economic environment of global major

economies, including China
Inflation level, tax policies of countries which
Baosteel sells products
Fierce price-war competition from other steel
mills
Bargaining power of steel users, likely house
builders, automakers, shipbuilders
Prices of iron ore, coking coal and scrap, etc.
The synergetic effect of the combined Baosteel

and Wuhan Steel and the similar mergers and

consolidations
Social/Cultur Urbanization and demographics of China the
al
slow growth of people coming to cities and the
ageing population place a ceiling on the steel
use potential
Chinas heavy pollution environment impacts
social awareness growth of renewable energy
industry, encouraged by government to address
the pollution problem, brings relevant steel use
opportunities
Low-carbon cultures to discourage the potential
of steel use in automobiles and other consumeroriented big-ticket products
Culture of state-owned enterprises in China
Technologic
al

Downstream users and steel mills develop

platform to jointly do energy-efficient steel
products research and development
Development of alternative materials, such as
carbon fibre and aluminium materials, to
replace steel materials used in automobiles,
etc.
The increased availability of scraps to recycling
rather than processing from iron ore and coking
coal
3D additive manufacturing technology a
threat to steel mills operating in large scale
Sell steel products through online e-commercial
channels rather than traditional trade agents

Legal

Environmental protection agency

Trade restrict barriers foreign countries,
mostly voters in US and EU, are against the
imports of China-made steel products, and
consequently Chinas market economy status
role is subject to scrutiny
Competition and tax laws

Environment The environmental consciousness limit the

al
emission of carbon dioxide from steelmaking
Use environment-friendly logistics and
distribution
Sustainable outsourcing
Corporate social responsibilities in local
communities

Sun Feng