Chinese non-grain oriented electrical steel prices hard to increase in H1 on weak customer demand
----Interview with Tian Chenghui, General Manager of Wuhan Jinyuhua Electric Co., Ltd.
- Located in Wuhan, Hubei province, Wuhan Jinyuhua Electric Co., Ltd is mainly engaged in the trading business of non-grain oriented electrical steel. The company is trying to serve every customer with the best service.
- Asian Metal: Hello, Ms.Tian! Thanks a lot for accepting our interview. Can you please introduce your company briefly?
- Tian: Our company mainly sells non-grain oriented electrical steel from WISCO with grades from 470 to 1,300 and the monthly trading volume is about 600t. Our customers are mostly motor factories in Zhejiang province, Shanghai and the Pearl River Delta region.
- Asian Metal: Chinese domestic non-grain oriented electrical steel prices went up obviously last Q4. What is the market react to this?
- Tian: Non-grain oriented electrical steel prices in major markets of China went up by about RMB2,500/t (USD363) or 50% in Q4 of last year mainly supported by higher raw material costs and increase in steel mills’ list prices, which is beyond the expectation of many people. However, customers still placed orders actively as it was the traditionally high season at that time.
- Asian Metal: After the Spring Festival holiday, domestic non-grain oriented electrical steel prices witness a downward trend. What do you think is the reason for the price decrease?
- Tian: That’s true. For example, prices in Wuhan have decreased by RMB200-300/t (USD29-44/t) after the holiday. I suppose oversupply and weak customer demand are mainly responsible for the price decline.
- Asian Metal: Recently, domestic steel producers all announced to keep list prices of non-grain oriented electrical steel stable for March production. How will this influence the market?
- Tian: It is under my expectation that steel mills would keep their prices of non-grain oriented electrical steel unchanged for March production. Over the past few months, they kept raising prices significantly by more than RMB300/t (USD44/t) each time, which was the main reason for the sharp price increase in spot market. However, prices began to go down after the Spring Festival holiday because of limited customer demand. Steel mills’ price policy for March is a response to the current market situation, but this will make customers more pessimistic about the market outlook.
- Asian Metal: How is the demand from downstream industry now?
- Tian: The market will enter the traditionally low season soon. Seeing the high price level, downstream customers just purchase materials in small quantities for urgent need and refuse to build large stockpiles. Besides, as prices went down recently, most customers are just taking a wait-and-see attitude now and placing orders sparingly.
- Asian Metal: What is your prediction of the market trend in H1?
- Tian: Considering demand from customers is weak, I do not expect non-grain oriented electrical steel prices to go up in the coming months especially they are still relatively high after the decrease this month.
- Asian Metal: Do you have any plans in the year of 2017?
- Tian: We will try to actively seek new customers on the basis of maintaining existing ones. We should be quite cautious about each investment under such a market situation.
- Asian Metal: Thanks for your kindly support and wish you and your company all the best.
- Tian: It’s my pleasure. The same to you!
