Jiangsu Shagang (Group) Company Limited (Initial Issuer Report)

The Issuer Rating reflects Jiangsu Shagang (Group) Company Limited’s (“Shagang” or “the company”) competitive market position as the largest private steel producer in China, above average operating efficiency and above industry-average utilization rates, and strong operating cash flow. The company’s rating is constrained by its low raw materials self-sufficiency which makes it vulnerable to commodity price fluctuations, slow margin growth in key products amid rising raw materials costs, and relatively high yet stabilizing financial leverage in relation to its “BBB” category credit profile.

The Stable Outlook reflects our expectation that Shagang will sustain a stable and sizable scale of operation, continue to exhibit a prudent manner in reducing and containing its financial leverage, and maintain its positive operating cash flow and liquidity position.