Bringing into play the role of bridges between Japan and China, cultivating intensively and expanding the market of steel products
----Interview with Masayuki Abe
President
Asahi Trading Co., Ltd.
- Asahi Trading Co., Ltd. was founded in 1968, four years before the formal resumption of diplomatic relations between Japan and China. In 1974, our company provided WISCO with the silicon steel production line of Nippon Steel in Japan. In 1978, we participated in the signing of Baosteel’s Phase I Construction Contract. Asahi Trading is a highly specialized Japanese steel supplier starting with steel products. Our company has a subsidiary company in Shanghai, Huayang Trade (Shanghai) Co., Ltd.
- Asian Metal: Hello, President Abe. Thank you for taking our interview. Please briefly introduce your company's business scale and main products.
- President Abe: Our company's main business is the import and export of ordinary and special steel, non-ferrous metals, logistics containers and automotive coatings; castings, refractories, various equipments, environment and residential related trade.
- As for steel products, we mainly deal with cold-rolled surface treatment steel, high nickel steel, rack-chord extremely thick steel, special steel for cutting tools, standard container dry box steel and battery shell cold-rolled steel.
- Asian Metal: Which steel mills do you mainly cooperate with?
- President Abe: Asahi Trading is a Japanese company. We have already had almost 50 years of long-term and stable cooperation with Japan's Nippon Steel & Sumitomo Metal, Nisshin Steel, JFE and other mainstream steel enterprises.
- Asian Metal: Who are your major customers?
- President Abe: Our main customers are CIMC, Tianjin Forestry, China's major battery factories and so on.
- Asian Metal: What are the characteristics of iron and steel markets in China and Japan?
- President Abe: China and Japan are both countries with the highest steel output in the world, while China's steel output is far higher than Japan's. Since 2007, with the slowdown of Japan's modern industrial economy, its crude steel production has been decreasing. However, in the process of rapid economic development and transformation and structural adjustment of iron and steel industry, China's crude steel output has maintained a steady growth. At present, the monthly output of crude steel in China is about 70 million tonnes, while that in Japan is about 8.5 million tonnes, which shows the rapid development of Chinese steel industry.
- For a long time, prices of steel products in China are lower than those in Japan. Take HRC as an example, the selling price of imported HRC to China is calculated on the basis of the FOB price of Japanese HRC.
- Import Price= (FOB Price + Freight + (FOB Price + Freight)*Import Tariff/(1 + Insurance Rate)* (1 + VAT Rate).
- In the calculation process, steel import tariff is related to steel products, for example the tax rate of HRC is 5%, insurance premium rate is 0.3%, value-added tax rate is 16%. After substituting the formula, the sales price of imported Japanese HRC in China since 2011 can be obtained. Compared with the price of Japanese HRC, Chinese steel used to have obvious price advantage. The price difference was about RMB1,500/t before. Then, as the international steel market fell, the price gap narrowed to about RMB300/t. China's domestic steel products no longer have obvious price advantages.
- Asian Metal: What is the production share (ratio) of major steel products in Japan?
- President Abe: As for Japan's crude steel production ratio in 2017, Nippon Steel & Sumitomo Metal and JFE Steel took about 40% and 27% respectively. These two steel mills accounted for about 67%. With Kobe Steel and Nissan Steel, Japan's four steelmakers owning blast furnaces took about 76% of, close to 80%. Compared with 2016, the production of Nippon Steel & Sumitomo Metal decreased by 4% in 2017.
- The list of the top 10 steelmakers is the same as it was in 2106. But Daido Steel rose to 6th from 7th last time. JFE Bars & Shapes Corporation which ranked No.5 in 2016 was No.7 in 2017 due to production reduction caused by the business integration within JFE Group. The outputs of Kyoei Steel (No.8), Sanyo Special Steel (No.9) and Godo Steel (No.10) all increased in 2017.
- In 2017, Japan's domestic crude steel production reached 148.4 million tonnes. Japan's domestic demand for steel has been very stable, but due to the impact of equipment failure caused by the aging of steel plant equipment, Japanese crude steel production saw a slight decrease in 2017 compared with the previous year.
- Asian Metal: Do you have any cooperation with Chinese companies in steel sales?
- President Abe: Asahi Trading has been cooperating with Guangzhou Eastern Time Development Energy Materials Co., Ltd. (http://www.eta-hk.com/Chairman: Tao Xu) in the field of cold-rolled steel sales for battery shells. Cold-rolled steel for battery shells is a deep drawing cold-rolled material specially developed by Japan’s Nippon Steel & Sumitomo Metal for Eastern Time Development. The grade is SPCC-BT or SPCC-BTD.
- It is well known that steel mills in Japan do not directly sell steel products, usually by entrusting traders to act as agents. After the cold-rolled steel for battery shells is sold to Eastern Time Development by our company, it is cut and sliced by them and then sold to the battery shell production (stamping) enterprises in China. This material has been sold for nearly 20 years, with a total sales volume of 400,000 tonnes, and has won high praise from Nippon Steel & Sumitomo Metal.
- Asian Metal: Do you have any other business besides steel products?
- President Abe: In order to expand Chinese market for Japanese high-performance automobile coatings, we have been focusing on the huge automobile industry market in China which is now rapidly growing. We not only participated in the joint venture of local production enterprises of automobile coatings in 1995, but also jointly opened up the export business of automobile coatings to China with famous Japanese coatings manufacturers. Based on years of import and export performance, we have established a solid trust relationship with our customers, and strive to contribute to the development of China's automobile industry.
- Through long-term export of automotive coatings and chemical raw materials, we have accumulated rich logistics experience. Especially in the import and export procedures, regulations, countermeasures and temperature management of small quantities and multi-varieties of dangerous chemicals, and apply them to the logistics business between China and Japan, pouring all the strength into its development.
- 《Object Products》
- Automotive coatings, architectural coatings, industrial coatings, hydrophilic coatings and protective films for automobiles.
- Asian Metal: Can you tell us about your business priorities and new strategic plans in the future?
- President Abe: Based on the existing products, we are deeply exploring and looking for more horizontal and vertical development possibilities. And we are also trying to find new projects to cooperate with China.
- For example, our company started about 15 or 6 years ago to provide major aluminium manufacturers in China with liquid aluminium filtration related devices (tubular filters) and related products produced by Mitsui Kinzoku in Japan. After years of operation, the performance of aluminium products in China has been greatly improved. Especially in the field of aluminium foil, China's aluminium foil products have made rapid progress. So recently, Asahi Trading is also considering the import of China's aluminum foil products and selling them in Japan. Aluminum foil products can be widely used in food packaging, pharmaceutical product packaging and other fields.
- Asia Metal: Thank you for your support. Wish your company a great success in the future!
