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[January 2009]
Gengsheng Wins $2 Million New Refractory Product Contract With Chinese Steel Mill
China Gengsheng Minerals Inc (Gongyi, China) has signed a new full-service contract for refractory products with Hebei Wenfeng Iron & Steel Co Ltd in Hebei Province. The total value of the contract is approximately US$2 million per year, based on the current estimate of Wenfeng's production.
The company provides full services to China's steel mills in the form of refractory product installation, testing, maintenance, repair and replacement. Full-service customers contributed 42% of total sales in the first nine months of 2008.
"I am pleased to announce this new contract win," said Shunqing Zhang, Chairman of Gengsheng. "Full-service programmes typically enjoy higher gross margins than straight product sales. In the current economic condition, it's important for us to focus on stable customer relations. Another advantage of full-service contracts over product sales is that we collect payment on a monthly basis, which will help improve cash flows."
Wenfeng is a Sino-foreign joint venture with an annual steel production capacity of 3.5 million tons. Its main products are billets, hot-rolled plates, hot-rolled strips and light rails. In 2007, Wenfeng ranked No. 23 in the Forbes List of Top Chinese Enterprises in 2007, according to Wenfeng's website.
ENDS