China Gensheng Minerals Wins Product Contract

China Gengsheng Minerals, Inc., a materials technology company in China, has announced that it has signed a new full-service contract for refractory products with Hebei Wenfeng Iron and Steel Co., Ltd. in Hebei Province.

The total value of the contract is approximately $2 million per year, based on the current estimate of Wenfeng’s production.

Gengsheng provides “full services” to China’s steel mills in the form of refractory product installation, testing, maintenance, repair and replacement, according to the press release.  Full-service customers contributed 42 percent of total sales in the first nine months of 2008, the company says.

“I am pleased to announce this new contract win,” says Mr. Shunqing Zhang, chairman of Gengsheng. “Full-service programs 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 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 Web site.