Exploring steel export market energetically relying on large stocks

Asian Metal: Hello Ms Zhang, thanks for accepting the interview from Asian Metal. Please give a brief introduction of your company's business scale and main products.

Ms Zhang: Our company is an export company developed from the domestic trading of steel products. We are mainly engaged in HGI, PPGI, CRC, Galvalume and HRC. We can export all these products except HRC. So far this year, our company's sales volume at home and abroad has reached about 300,000 tons.

Asian Metal: Which mills does your company cooperate with?

Ms Zhang: We are the direct agent of many state-owned steel mills like Tangshan Steel, Shougang Group, Ansteel and so on. In addition, we deal with products from many private steel mills includes but not only Zhayi Steel, Ansteel Tiantie, Xinyu Steel, Yinheng Steel and Zhixing Metal.

Asian Metal: Where does your company export materials? How about your customers?

Ms Zhang: We are still exploring markets in foreign countries. Currently our customers including traders and downstream consumers are from South Asian countries and the Middle East and South America.

Asian Metal: Compared with steel mills, what are main advantages of your company?

Ms Zhang: First, our sales team is familiar with the steel market situation, professional of exporting business. We can provide good service by quick response and a complete range of products according to customers' requirement.

Second, generally speaking, steel mills will ask customers to place orders higher than a minimum purchasing volume. However, we can conclude orders with small volume which cannot be accepted by steel mills.

Third, most customers can only sign contracts for future delivery with steel mills but we have a large amount of inventories and can arrange shipment when customers pay. We explored the exporting business relying on stocks at the beginning and later we gradually received some orders for future delivery.

Asian Metal: Which kind of HGI coil do overseas customers prefer? Regular spangles or zero spangles?

Ms Zhang: According to our sales, the demand for HGI coil with regular spangles is stronger than that with zero spangles.

On the one hand, it was caused by the distribution of our customers. At present, our customers are mainly from underdeveloped countries, where customers like HGI coil with regular spangles. What's more, they think the larger spangles are, the better. For instance, the quality Shougang Group's HGI coil is almost the best in Chinese domestic market, but some customers think materials from Tangshan Steel and Handan Steel are better, as they are produced with larger spangles.

On the other hand, customers will choose cheaper materials according to their usage. HGI coil with zero spangles are more expensive than those with regular spangles. If some customers use these materials in floor, which does not have many requirements on products, they will certainly choose HGI coil with regular spangles for lower prices.  We generally exported HGI coil with zero spangles to Russia, Malaysia and South America, where there are more upmarket customers.

Asian Metal: HGI coil export kept falling down in H2 of last year and began to rebound finally at the beginning of this year. The current price level is approaching the lowest level of last year. How do you think the price will go in Q4 of this year? What are main factors?

Ms Zhang: I think the price should go up slightly in Q4 of this year. Yes, the current price has been almost the lowest level in recent years. In addition, the government has carried out the pollution curb before the National Day and will pay more attention as they did when the winter comes. From an overall survey of HGI market situation in recent years, prices did not show big decline in Q4 of every year except 2015.

Asian Metal: With the increasing trade friction, China's steel exports have declined for the fourth consecutive year. The development of steel export will face more difficulties. What challenges do you confront? What are your expansion plans?

Ms Zhang: Trade frictions do bring us many challenges, especially anti-dumping duties and foreign exchange collection. In the past two years, the anti-dumping from Mexico, Ukraine and Malaysia on HGI coil from China caused our loss of many important customers.

This year, steel export market did not perform active. Many countries faced the depreciation of currency, lower purchasing power and weakened domestic demand. However, the export volume of our company increased, owing to strong service awareness of our sales team. In addition, our sales growth this year is mainly based on newly increasing customers in Southeast Asia and South America. In the future, we need to explore deeper into the existing market, continuously develop the blank market and strengthen the market development through regular participation in foreign exhibitions and other ways.

Asian Metal: Thanks for accepting the interview from Asian Metal and best wishes for your company!

Ms Zhang: Thank you for providing us this chance to take part in the interview.