Chen Zhiping: Chinese domestic non-grain oriented electrical steel prices likely to go up further at the year end
----Interview with Chen Zhiping, General Manager of Foshan Shunge Steel Trading Co., Ltd.
Located in Foshan, Guangdong province, Foshan Shunge Steel Trading Co., Ltd. was founded in 2008. It is a service company dealing with the business of steel trading, processing and distribution. The company is mainly engaged in non-grain oriented electrical steel, grain oriented electrical steel, cold rolled deep drawing steel coil, galvanized steel coil, electro-galvanized steel coil, PPGI coil, hot rolled and pickling steel coil etc.
Asian Metal: Hello, Ms.Chen! Thank you for accepting the interview. Please give us a brief introduction about your company firstly.
Chen: It is my pleasure to be interviewed by Asian Metal. Our company is the sales agent of Shougang Steel in South China and also deals with materials from Baosteel, WISCO, TISCO and Bengang Steel with a monthly trading volume of about 8,000 tonnes.
Asian Metal: After the National Day holiday, Chinese domestic non-grain oriented electrical steel prices went up significantly. What factors do you think that support the market price increase?
Chen: It is true. Domestic non-grain oriented electrical steel market prices saw an increase of more than RMB300/t in October. I think this is mainly because of the substantial increase in steel mills’ list prices. Since steel mills raised their prices, traders have to follow suit on higher purchase cost. Taking Shougang Steel for example, it further lifted the list price of non-grain oriented electrical steel for November production by RMB175.5/t after the increase of RMB351/t for October.
Asian Metal: Domestic steel producers such as Baosteel and WISCO have all significantly raised their prices of non-grain oriented electrical steel these two months. Could you explain the reason?
Chen: I think the main reason is demand from downstream customers becomes better. According to steel mills, orders from end users increased in recent months, so many steel mills also reduced the supply to traders. Besides, since non-grain oriented electrical steel prices used to stay at a low level for a long time amid the gloomy steel market, steel mills have the willingness to increase prices, too.
Asian Metal: Do you think steel mills will raise their prices again for December production?
Chen: In accordance with the current market trend, I think steel mills will increase their prices for December production by at least RMB100/t. However, considering downstream customers have suffered a lot of cost pressures due to the sharp price increase in recent days, I believe it will be better for steel mills to keep prices stable.
Asian Metal: What’s the market reaction after the sharp price increase?
Chen: There are two main features of the market at present, rapid price increase and tight supply from steel mills. As I explained earlier, steel mills have to reduce their supply for traders in order to ensure the direct supply for end users. Some steel mills have cut the supply by more than 50%, which leads to a low market inventory. In addition, because of the rapid price increase these days, end users also complain a lot due to increased cost pressures.
Asian Metal: What is the status of the downstream industry of non-grain oriented electrical steel now?
Chen: This year the real estate market is relatively prosperous, which also stimulates the development of home appliance industry to a certain extent. Leading enterprises such as GREE, Midea and Haier can receive enough orders, and the situation is also relatively good for some other small and medium enterprises. But I think the impact of the recent sharp price increase on the downstream industry is also quite large.
Asian Metal: What’s your prediction of non-grain oriented electrical steel market in Q4?
Chen: I think non-grain oriented electrical steel market prices are likely to go up further in the next 1-2 months, and the markup should more than RMB100/t.
