The steel market continues to be weak

On March 1st, in the steel trading hall of Shanghai market, a salesman looked at the “rebar price today” message on the screen and said: “I just got up for two days. I didn’t expect the market to go down so quickly. Now the steel business is not good. do!".

After the Spring Festival resumed trading, the domestic steel market showed a wave of price increases. A good start will allow steel traders to add a lot of confidence to the steel market in the Year of the Snake. Even so, for the living environment of the steel trade industry, steel traders are still hardly optimistic. The development of the new year has become their most pondered issue.

Multi-survival crisis: "Swiss snow flew into the spring thunder, and heaven and earth have returned in the spring; steel traders are pondering, and tides are ebbing and bitter." In the first week after the Spring Festival, the Shanghai steel trade industry exploded and disputes occurred. Some steel trade companies The accused went to court. Sources said that in March this year, steel trader loans will be concentrated on maturity. Perhaps there will be some steel trade and trade associations standing on the dock.

The past year has been the most serious year for steel traders. Some steel trading companies have been forced to close down, delist, and change their business because of continuing “upside down” prices and operating losses. Bosses have run out of business frequently, and bank loans have been withdrawn and funds have been cut off; repeated pledges have resulted in fraudulent loans and a crisis of confidence... Steel trading companies are struggling.

The steel market continued to be weak and sluggish. The steel trade industry was in a downturn as a whole, and steel trading companies have entered a “pain period”. In today's severe oversupply of steel production capacity, severe oversupply of the steel market, and the meager era of steel trade, the drawbacks of scattered, small, chaotic, and low concentration of steel trade enterprises have become increasingly evident. At the same time, steel traders encountered a series of new problems in their actual operations, including high operating costs, high resource costs, high capital costs, and reduced profitability. This "three highs and one down" has forced steel trade companies to seek more financing channels. A large part of the money of steel traders nowadays is loaned out through non-financial institutions. This operation, plus fees, management fees, etc., the highest discount interest rate of 2.4% to 2.5%. Many steel traders report that in today's market, lending to banks amounts to hard work for the banks. Sometimes they do not make money, and if they do, they have to pay extra interest. It is precisely because the steel trade business does not make money. Under the banner of diversified operations, some steel traders have drawn their money out to other industries, increasing the risk of capital operations.

The confidence crisis in the steel trade industry is also a pain point for the current steel trade enterprises. Due to the lack of strict and standardized supervision, individual trading companies have joined up with warehousing companies to obtain bank loans and other forms of loans by opening false warehouse receipts and repeating pledges. Some of the fraudulent loans that occurred in 2012 brought extremely bad influence to the market, leading banks and companies to dare to lend to steel trading companies. Some steel trade enterprises that are already in jeopardy have accelerated their bankruptcy due to capital chain breaks, and the industry shuffles are inevitable.

Under the stimulation of the market tightening, steel mills changed their marketing strategies, increased direct sales efforts, and opened up the terminal market, which made the steel trade enterprises that had been difficult to manage even worse. A few days ago, Hebei Youjia Iron and Steel Company proposed to increase direct supply for direct sales in 2013. The direct supply direct sales ratio will reach 60%, the surrounding market will sell 8 million tons, and the sales volume for the project will be 3 million tons; in Shanghai, Baosteel will account for more than 70%. The products are directly sold to large-scale manufacturing enterprises; Masteel's direct sales ratio of steel products exceeds 50%; Ansteel Tiantie also proposes direct sales of 550,000 tons of high-efficiency materials in 2013, with a direct supply ratio of 40%. Each steel mill has developed downstream users through direct sales to ensure that the company’s orders are profitable. The steel companies’ space for survival has been further squeezed and forced to transform and switch.

Seven Ways to Survive the Spring Festival On the eve of the Spring Festival, a steel trade company is holding a year-end summary meeting in the building of a steel distribution center in Dabaishu, Shanghai. The general manager reported a good news to the employees: In 2012, the company turned a profit and realized a profit of nearly 10 million yuan. yuan!

Originally, the steel trade company in 2012 to carry out business model innovation, mobilizing employees to attack the terminal market, the establishment of market development department, the development of end-users; steel sales and sales price to achieve upstream and downstream "locked", effectively circumventing the steel price shocks At the risk, the sales volume of steel products increased significantly over the previous year, eventually turning back losses and realizing a shift from a loss of 6 million yuan to a profit of 10 million yuan. The general manager told the employees that in 2013, we would continue to innovate in our operations so that the company could achieve better operating results.

The survival environment faced by steel traders is getting more and more serious. What is the way out? The industry believes that the new year steel trade enterprises only improve their own operating quality, and constantly adjust their business models according to market changes, in order to remain invincible in the fierce market competition.

From the current point of view, steel traders respond to the market crisis and innovate and change, and they can start from the following seven aspects:

First, transformation, mergers, and reorganization will change the current status of scattered, small, weak, and chaotic, and increase the degree of concentration. This is the only way for steel companies to survive and develop, and it is also the only way to continue to grow stronger and bigger. At present, some steel trading companies have already exchanged resources and funds within the circle of friends who are well aware of the situation and have joined forces to eliminate the loss points of the company and look for new profit growth points for the company. Some steel trading companies with strong financial strength and the ability to resist market fluctuations use existing social resources to tap the potential of self-salvation in the industry and help some companies tide over difficulties. Some steel trade enterprises with a certain scale fully exploit the advantages of modern management systems, use the power of all members of the company's board of directors, and more effectively solve the problems encountered in development.

Second, innovate the business philosophy and expand the end market. At present, under the ruthless market, the steel trade enterprises have abandoned the speculative operating style of the “Bo market” in the past and instead replaced them with “order-style” sales methods to set a single sales order, lock resources, and lock prices. To avoid market risks. At the same time, they actively explored the terminal market and realized their own benefits in the value-added services for downstream end-users. For example, a Shanghai steel trade company focused its business on end-users and withdrew its business leaders from the secondary and tertiary distribution markets. It focused on major engineering projects and provided them with the steel used for the project, according to project needs. The steel is processed, combined, and dosed and delivered to the door on time according to the nodes of the project construction. The full service of “a basket” has accelerated the construction progress of the entire project and achieved better results. The owners of the project are very satisfied. In addition, this company has also achieved its own value enhancement and achieved better operating results in providing value-added services to its customers.

Third, change the traditional steel business model, win market share with innovative business models, and enhance core competitiveness. A large-scale trading company adopts a new model of "integrated purchase and sale", integrates "purchase" and "sales" into one, and conducts business activities with the focus on iron and steel production enterprises. The company put forward the strategic idea of ​​“establishing a production service supply chain business system with a steel plant as its core” and formed a good and close strategic cooperation relationship with the steel mills. On the one hand, it provided key raw materials such as coal and coke to steel companies. Iron concentrates, scrap steel, ferroalloys, etc., promote their own raw material sales; on the other hand, steel products are purchased from steel mills to form a closed-loop business with interactions between purchases and sales, which can enhance comprehensive profitability, reduce capital occupation, and reduce business risks.

Fourth, move the sales focus forward and implement the “near-end” marketing model. At present, the profitability of steel trade has shrunk dramatically. One of the reasons is that there are many circulation links and logistics costs are high. For example, steel trading companies order from steel mills, transport them to their designated warehouses, and then distribute them to intermediate trading companies. Intermediate trading companies then transfer to other middlemen, and finally reach end users after three to five circulation links. After layers of distribution, the profits have already been running out. When the market oscillates and the price falls, it will certainly lose money. To this end, some steel trade companies have shifted the focus of their sales to the most end-to-end, providing steel to end users. Some steel trade companies' "near-end" marketing has already reached the steel mills and users, sending the steel products provided by steel mills directly to the end-users' construction sites or designated locations. This not only reduces the delivery of steel, speeds up the logistics, but also saves logistics costs.

Fifth, pay attention to scientific management, optimize the inventory structure, accelerate capital turnover, and reduce operating costs. At this stage, the steel trade enterprises can adopt the method of reducing costs: instead of blindly expanding the scale of operations, they are doing their own specialization, deepening their efforts, making efforts to reduce costs, and trying to eliminate loss points and open up profit growth points; Reducing inventory, optimizing inventory structure, spotting timing, reducing capital occupation, accelerating capital turnover, deepening cooperation with banks, steel mills, and large state-owned enterprises, and even participating in overseas financing to ensure smooth funding channels; using complementary pricing policies from different steel mills Sexual, hedging price risk; use the futures hedging function to carry out electronic transactions, do hedging business, hedging price risk; attach importance to the relationship of the warehousing system, send someone responsible, establish an early warning mechanism.

Sixth, reestablish the relationship between manufacturers and establish a win-win cooperation mechanism. In 2013, some steel mills introduced policies and measures for cooperation with steel trading companies, hoping to use the sales channels of steel trading companies to participate in market competition. These steel mills provide various conveniences for steel trade companies to order, including zero margin, goods to dock payment, cargo delivery pricing, insured price mode, long-term quarterly change, “one single discussion”, etc., and even directly participate in investment in steel trading companies. Steel trade enterprises must firmly seize this good opportunity to actively and actively cooperate with steel mills, relying on the advantages of steel mills to jointly explore the market and achieve a win-win situation.

Seventh, we will appropriately participate in electronic and futures market transactions and combine the three markets of futures, cash and electronic trading. Nowadays, some steel trading companies mostly focus on varieties that can be traded in the three markets of futures, spot and electronic trading. For example, in 2013 some steel trade companies will reduce the scale of operations of steels such as Gonggang, channel steel and angle steel, and will focus their products on rebar, wire rods and hot rolled coils, because these varieties can be traded in all three markets. Utilize the hedging function of futures and electronic trading forward contracts to circumvent market risks.

At present, many steel trading companies are trying to adopt the above-mentioned various measures, to overcome difficulties and open up new paths, in order to be able to overcome the difficulties, out of the “flood”, and better survival and development.