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Stainless steel market situation in the passing 2005 is unforgettable.
Generally speaking, we should pay attention to the following aspects:
1) Market price has fluctuated with large extent in China stainless
steel industry.
Taken 304 2B2mm products in ZPSS for example,
its price has gone up from 25800 Yuan/ton at late Dec.04 to the peak level
of 26600 Yuan/ton at late Feb.& early Mar.05, after that it has begun to
drop, and up to late Nov.05, it has declined to 17900 Yuan/ton. Meanwhile
stainless steel price in Baoxin Stainless Steel Co. Ltd. has dropped from
26500 Yuan/ton to 17500 Yuan/ton, with dropping extent reaching 34% of 9000
Yuan/ton.
2) Steelmakers and distributors have begun to lose profit instead of
gaining huge profit in the previous time.
Steelmakers have begun to suffer profit loss.
Take 3mm 304 HR & 0.6mm CR for example, the profit margin of steel
enterprises has changed from gaining 3000 Yuan/ton profit to losing 3000
Yuan/ton profit.
Meanwhile the distributors have also suffered
this kind of situation. The highest profit margin has been 1000 Yuan/ton,
while they have also suffered the most serious profit loss of 2000 Yuan/ton.
3) Stainless steel import volume changes with large extent.
Take CR products for example, CR import has
reached the peak level of 123.3 thousand tons in Mar.05, which has dropped
to 67.2 thousand tons in Oct.05, with dropping extent reaching 46%.
While in the same period of 2004, CR import has
dropped from 54.1 thousand tons to –22.3 thousand tons in Aug.05, with
dropping extent reaching 76.4 thousand tons.
4) The price released by steelmakers each month has promoted stainless
steel price up in the past, while it has little impact toward current market
situation or even follow the market price trend.
Starting from Aug.04, the open quotation of
steel enterprises has gone up month by month, which has promoted market
price up firmly, while in May 05, market price has begun to drop, while
certain steel enterprises have intended to push the price up. After that the
open quotation of steel enterprises have moved away from market price, and
starting from Jun.05, steelmakers’ general price has begun to follow the
trend of market price.
Some steelmakers have even put forward the
“hidden price policy”, which has worsened the price fall in stainless steel
market.
5) Stainless steel productivity has expanded
Major stainless steel CR plants in China have
started the operation of 16 CR mills (a production line in Lisco is equal to
3 rolling mills, 2 rolling mills in Qingdao Posco, 2 mills in SKS, 4 mills
in Baoxin Steel & 5 mills in Taiyuan Steel), forming 1.5 million tons of
productivity.
Athough the new CR mills have begun to launch
products to market since 2Q.05, esp. Baoxin Steel & Taiyuan Steel have
supplied products since the second half year of 2005, the actual
productivity for 2005 is less than 1/3 of the total productivity. However,
the newly added productivity has been magnified in the market, thus some of
them have requested to assure stainless steel price by limiting their
output.
Due to various reasons, esp. the price of CR
sheet & HR coil (imported HR coil) price has reversed, the actual output
increment may not exceed 200 thousand tons.
6)
The discussion on 200 series stainless steel has worsened, and the
price of 200 series & 300 series products has fluctuated with large extent,
meanwhile the supply of 200 series products has also fluctuated with large
extent.
The dispute is still continuing, while there is
no definite conclusion up to now. While during this period, it has affected
200 series & 300 series stainless steel to deep extent. For example, the
price difference between 304 & Ni1 200 series products has fluctuated
between 5300 and 10700 Yuan.
Meanwhile 200 series stainless steel products
supply has fluctuated with large extent. No one dares to place order to the
foreign countries in certain period. The price of 200 series stainless steel
has fluctuated with large extent, and the monthly output of 200 series
stainless steel in Zhejiang province has reached 100 thousand tons at most,
while the lowest level has only been 10 or 20 thousand tons.
7) It is said that stainless steel output in
China will be oversupplied.
After the interview to Hao Peigang (from Taiyuan
Steel), China Industry News has released that stainless steel output has
exceeded that of demand, which should be paid attention to by China
government.
Hao Peigang said, China has imported 2.9 million
tons of stainless steel in 2004 (more than that of produced in China
domestic market. While the existing stainless steel productivity and that
under construction has totaled 15 million tons, plus the 10 million tons of
scheduled productivity, general stainless steel productivity may exceed 25
million tons, higher than the global output in 2004.
Based on the research and investigation by
Taiyuan Steel for several years, the largest stainless steel capacity in
China may be 10 million tons. And the 15 million tons of productivity can be
divided into three sections: The first one, large stainless steel enterprises
with annual productivity exceeding 500 thousand tons. These enterprises
cover Taiyuan Steel, Baosteel, ZPSS & Guangzhou Lisco etc. enterprises. The
steelmaking equipments in these enterprises have conformed to the national
policy as well as adopted the internationally advanced technique, and these
enterprises have directed the developing trend of stainless steel industry.
It is forecasted that they can form over 6 million tons of productivity up
to 2008.
The second group, medium scaled stainless steel
enterprises complying with national policy and the technique request on
stainless steel products. The productivity of these enterprises has been
around 2.4 million tons, these enterprises cover Dongbei Special Steel,
Nantong Special Steel, Wenzhou Ruitian Steel, Huzhou Jiuli, Zhejiang
Liqingshan etc. enterprises, meanwhile Sichuan Stainless Steel Co. Ltd has
been under construction, and their total productivity will exceed 2.8
million tons.
Moreover, 200 thousand tons productivity of
former stainless steel system (such as Daye Special Steel, Fushun Special
Steel etc.) has not been covered in the statistics data.
The third section covers Jiangsu, Zhejiang,
Fujian, Guangdong & Guangxi areas, and these enterprises’ productivity has
exceeded 5 million tons. If China government does not control its
productivity, these productivity will increase to further extent.
The deputy manager of Baosteel Stainless Steel—Liuan
has indicated that if the scheduled projects and those projects under
construction starts operation, stainless steel melting productivity will
reach 20 million tons in 2010, and that of HR productivity will reach 15
million tons, moreover, CR productivity will exceed 10 million tons.
Liuan has divided current stainless steel
productivity into three parts just as that of China Industry News, the
difference is: the first group is 6.7 million tons, the second group is 2.9
million tons, the third group is 500 thousand tons and their total
productivity is more than 10 million tons.
Liuan has appealed that there is a long way in
front of China stainless steel industry, and China government should
implement a rational industrial policy to guide the development of stainless
steel industry.
In Jul.05, Lilong the director of China Metal
Material Circular Association Stainless Steel Branch has indicated in
“review and outlook of China stainless steel industry” that up to end 2008,
stainless steel productivity in China will reach 17.48 million tons.
During the 4th China International
Stainless Steel Conference held in Sep.05, the commissary director of China
Special Steel Stainless Steel Branch—Licheng has indicated in its speech of
“problems in the development of stainless steel industry in China “that the
adjustment schedule of China stainless steel industry will come true in
2006. that is to say, stainless steel productivity will reach 9 million tons
(4.9 million tons produced by state-owned enterprises, 1.6 million tons
produced by joint ventures, and 2.5 million tons produced by private
enterprises).
At present, three “10 million tons” has still
been popular in China stainless steel market. The first one is: “existing
productivity is 10 million tons, that under construction is 10 million
tons”, and that under schedule is 10 million tons. And the second one is:
“high grade 10 million tons, medium level 10 million tons and low grade 10
million tons”.
8) China government enhanced macro-control policy, stainless steel
enterprises have to retreat from market or stop production due to the
capital and environment protection etc. problems.
An event in Jiangsu province: in order to solve
the tight capital situation, Changzhou intermediate court have adjudicated
the fixed asset of a stainless steel enterprises to the accuser, and the
equipments of a this plant has been disintegrated.
An event in Zhejiang province: banks have
enhanced their supervision, and in order to reclaim capital, the inventory
of a stainless steel distributor has been auctioned.
Events in Hebei & Liaoning provinces: two newly
built stainless steel enterprises with annual productivity reaching 200
thousand tons have been forced to stop production lacking of floating
capital.
An event in Zhejiang province: a stainless steel
enterprise with 300 thousand tons of annual productivity has been forced to
stop production due to its conflict with the local farmers, and it have not
resumed production since 4Q.05.
9) Fight in stainless steel industry has worsened.
Firstly, it is the competition between foreign
stainless steelmakers and China domestic steel enterprises, this competition
occurs both in the sales field and the raw material control.
The competition between China domestic steel
enterprises, distributors and the end users has worsened.
10) Stagnant and booming market situation co-existed in China stainless
steel market.
After the large fluctuation in China stainless
steel market in 2005, industry insiders in stainless steel industry has
suffered stagnant situation, and most of them have retreated from current
market.
While the outsiders of stainless steel industry
have been unaware of this situation and they have still immersed in the
hallucination of “rapid development and good profit”. Although many aspects
have indicated that stainless steel industry in China has suffered serious
oversupply situation at the moment, many parties have been booming and ready
to inject lots of capitals into stainless steel industry.
At present, Baosteel & Naning Lianqiang’s 1.8
million tons project, Tangshan Steel’s 1.2 million tons project, and
Wenzhuo’s 1 million tons project have been under construction.
All in all, stainless steel market has suffered
huge fluctuation in the passing 2005, which would be unforgettable for all
Chinese.
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