The Research On The Improvement Of Iron Ore Trade Value Chain Of SM

As China’s Market-Oriented Economy model matures and the level of social and economic development further advances, the mining industry has been expanding at an exceptionally high pace. Since 2014 with the fall in iron ore price, the profit margin of domestic iron ore traders quickly shrinks. As a major state-owned mining and resources trading company, SM has experienced similar problems while conducting iron owe trading business. The company needs refreshed business strategy and relevant risk management tools so as to adapt quickly to the "New Normal" of the industry. Below are the main points and creative solutions:To start, the article introduces the current market condition of iron ore trading. Then by analyzing the value chain status of both domestic and internal iron ore traders, together with applying at the value chain theory as the theoretical foundation for the research, we can link them with the current iron ore trading process, analyze SM’s internal value chain and better understand the issues SM is facing and ultimately discovers its disadvantages in production, marking and aftersales. In order to solve the issues the company is facing on the relevant joints on the value chain and achieve the long term vision, the article provides constructive improvement solutions through series of work procedure utilization and adjustment in its management structure, so that the value adding activities will play a powerful role in the value chain. Then based on the improvement solutions for SM’s iron ore trading value chain, we can conclude that SM can transform itself and remove the shortcomings in the value chain through internal management, utilizing its specialties in investing outstanding oversea mining projects and using hedging tools to manage price exposure, and ultimately improve the company’s overall competiveness in the market.The findings and conclusions from this report are very meaningful. As it constructively suggests the points SM needs to adopt to improve its value chain so as to adapt itself under the "new normal" environment, and these point are to be of use to other similar organisations in the field.