October 11, 2008

Steel traders seek ways to survive controlled export market

It is reported that China has not stopped strengthening macro controls over the steel industry, higher threshold for import & export trade and stricter quota system are still being studied, along with further potential cuts in export rebates, which have jointly made jammed domestic traders' business.

China Securities Journal has outlined views of some of them as under.

Mr Said Wang Jianzhong who has been doing trading for over a decade said "Just to buy and sell is no way out. He once developed iron ore in Vietnam and sold it to Chinese steelmakers in the form of ore fine, making fairly good profit. Yet, as China further hiked requirements for environment protection, Mr Wang had to move his processing plant to Vietnam. Later on, his plan to sell Chinese steel in Vietnam while trading Vietnamese ore in China also failed because of a series of rebate changes. He is also worried once heard NDRC wanted to set qualifications for steel importer & exporters and probably 30,000 tonnes per year is a must, since he only does 10,000 tonnes per year to 20,000 tonnes per year. He is now thinking to tie with others in order to survive.

Mr Dong Mingsheng, who operates Zhejiang Material & Metal Corporation with a trade value of CNY 20 billion, the curbing export measures have not deprived his competency but squeezed the profit margin. Mr Dong said he has changed his business, got orders of 28 ships and handed over the orders to shipyards while to supply steel himself, so as to extend the trade industry chain and avoid export curbs.

Mr Xue Changjiang GM of Shanghai Shunye Steel Group expressed his confidence that "The international market is tremendous, domestic traders should seize the opportunity. In possession of more than 20 domestic steel suppliers and a big sales network overseas, Shunye is ensured of steady trade volume and considerable revenue.”

(Sourced from MySteel.net)