Nearly Half Of Steel Price Plunge Contrarian Trading Enterprises Need To Break Through

China's steel mills and manufacturing companies is the "enemy"

, steel mills adhere to the "advance payment and delivery", and manufacturing requirements "Cash on Delivery" walk in the steel trade between the two companies to cushion the way capital at low prices, has been like a duck, earning pours. However, a sudden U-turn in the steel industry, squeezed down, for medium and small enterprises in the steel trade enterprises, except for manufacturers Advancer, making steel the difference, but also need to find new profit growth point.

Steel trading business dilemma Shanghai Jing Yi Xue Xinming Electrical Co., Ltd. Chairman, said: "In Stainless steel This area to cold in the 316L this species, for example, the price has moved from a high of 56,000 yuan per ton dropped to 30,000 yuan per tonne, now almost daily price cut. The more the original stock, and now they lose more. "He introduced one of the enterprises, the original estimated price of steel will be as good as with the first half of this year, so a lot of steel stocks, and now has accumulated losses of several billion, largely offset by profits already earned.

Addition to the price drop sharply, affecting the elongation cycle of payment, steel trade another major factor of business survival. Xue Xinming said that the original sent to the downstream steel manufacturers, the payment generally 20 days to recover, and now extended to 40 days, the time of payment, doubled, giving steel companies a lot of financial pressure caused by the steel trading business to buy steel, much of the funds came from bank loans.

Prices to drop abruptly and the payment cycle stretched for two major steel companies is a fatal blow. Iron and steel trade, the basis of survival is the steel mills and manufacturing enterprises of the "top cow."

Xue Xinming introduced in the steel industry chain downstream manufacturing enterprises, the general principle is cash on delivery; But for such a large iron and steel production Steel enterprises, must be paid before delivery, little roundabout room, iron and steel products between the upstream and downstream of each other so that the steel trade enterprises of survival. First Dianqian steel traders to purchase products from the steel manufacturer, and then transported to the iron and steel products upstream and downstream enterprises, recycling money, to complete a transaction, traders in steel demand to play a role in corporate finance.

In steel prices soared at its peak, steel traders as intermediaries there are many opportunities for making money. Xue Xinming said that there is a steel trading company in Jiangsu has been optimistic about Stainless steel Products that the domestic demand for stainless steel products will continue to increase, prices will continue to rise, from two or three years ago, ate into the stainless steel. As long as stainless steel prices, will buy; and if the market prices do not rise to the target level, this trade enterprises will not ship, so accumulation of a large number of stainless steel. This practice of hoarding a lot of iron and steel traders to make a fortune overnight. Especially the first half of last year and this year, steel prices have been rising, which a steel trading company stocks for many also earn more. But in the second half, there has been a 180 degree reversal.

By the financial crisis, domestic demand for steel decline rapidly. A large steel trading business official told this reporter, as adhere to the spot cash, his company is not affected by the financial turmoil, but he was responsible for the area from the sales point of view, compared with last year, sales growth by only 4% to 5%, while in previous years, generally about 15% to 17%.

Xuexin Ming estimated that Shanghai's steel trading business out of this year's estimated lost about one-third, person in charge of many trade companies have disappeared. Another industry source said, declining demand for certain varieties of steel so badly, there are some export list has been canceled, some payment cycle lengthen the estimated time 1 to 3 months next year will be even more sad.

China Iron and Steel Association statistics show that in October of this year, 71 large and medium steel mills loss of 5.835 billion yuan. Of these, 42 enterprises have losses, loss reached 59.15%.

Steel trade is still profitable

While the industry downturn, Xue Xinming steel trading company where the profits have only increased.

by: lili

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