----Interview with Mingguang Yang
General Manager
Wuxi Hongye Silicon Steel Co., Ltd.
Founded in 2016, Wuxi Hongye Silicon Steel Co., Ltd. is one of the major non-grain oriented electrical steel distributors in East China. With an annual sales amount of about 40,000 tons of NGO electrical steel products, the company is mainly engaged in sales of NGO electrical steel produced by Sha Steel, WISCO and Ma Steel, and also provides slitting cutting and logistics services.
Asian Metal: Welcome to the interview by Asian Metal Mr. Yang! Please introduce your company briefly.
Mr. Yang: Founded in 2016, Wuxi Hongye Silicon Steel Co., Ltd. is one of the major NGO electrical steel distributors in East China. We mainly provide NGO electrical steel cutting, distribution and logistics services, and have our own storage and slitting equipment. Our monthly sales volume of NGO electrical steel products stands stable at more than 3,000 tons. Our company is the tier one agent of Sha Steel’s NGO electrical steel producgts and also deals with materials produced by other steel mills such as WISCO and Ma Steel. Our products are mainly sold to enterprises in East China, especially those in Zhejiang, and we also supply materials to Shanxi, Shandong, Tianjin, Hebei and other regions.
Asian Metal: The three-year COVID-19 brought great impact on the downstream industries of NGO electrical steel. How about the demand from end users currently?
Mr. Yang: Since the outbreak of COVID-19, the orders from many downstream users, such as motor factories, have decreased significantly. At present, the volume of order is similar to that in 2022 but is only half or even one third of that before the epidemic. Relatively speaking, the new energy industry and high-efficiency motor industry have better demand for NGO electrical steel products at present.
Asian Metal: How about the current supply of NGO electrical steel products from steel mills?
Mr. Yang: As far as I know, most steel mills maintain normal production at present, and they have sufficient inventory. However, due to the willingness of steel mills to raise prices, they may appropriately control the amount of materials supplied to the spot market, resulting in a supply shortage of materials in the short term.
Asian Metal: Compared with 2021, the maintream prices of NGO electrical steel products in domestic market witnessed a sharp decline in 2022. What do you think are the main reasons for the price decrease?
Mr. Yang: In 2022, the maintream prices of NGO electrical steel products in domestic market went down significantly. Taking Sha Steel’s NGO electrical steel SG50W800 as an example, the prices dropped from about RMB6,300/t (USD869/t) at the beginning of 2022 to RMB5,300/t (USD731/t) by the end of 2022, with a total decrease of about RMB1,000/t(USD138/t). I think the main reason for the price decline is the decreased demand from consumers. Besides, the prices of NGO electrical steel products in China witnessed a sharp increase from the end of 2020 to the first half of 2021, with the prices rising from about RMB5,000/t (USD689/t) to above RMB8,000/t(USD1,103/t). With the increase of profits from RMB500-600/t (USD69-83/t) to more than RMB4,000/t (USD552/t), many steel mills increased their outputs during the period and the second half of the year, resulting in oversupply of market resources.
Asian Metal: From the end of last year to the first quarter of this year, domestic NGO electrical steel products' prices rebounded obviously. What do you think are the reasons for the price rebound? How about the demand during this period?
Mr. Yang: Since the beginning of December last year, domestic market prices of NGO electrical steel products started to rise with a total increase of about RMB700/t (USD97/t) until this March. The main reason for the price increase is that steel mills, encouraged by relativel short supply and the increasing prices of raw materials, kept raising their prices. At the beginning of December last year, the control of the domestic epidemic situation was gradually loosed up, resulting in many cases appeared throughout the country in a short time. The concentrated outbreak of the epidemic led to the obstruction of logistics, so the warehouses saw limited arrival of market resources. In addition, from December 1st, 2022 to March 1st, 2023, Sha Steel raised the Ex-works prices of NGO electrical steel products by a total of RMB850/t (USD117/t). Baowu Group and other domestic mainstream steel mills also announced to raise their prices of middle and low grades of NGO electrical steel products, which also played a major role in pushing the market prices up. Most market participants left the market before early February for the Spring Festival holidays. The demand gradually recovered after February. The period from February to May is the tradition peak season for home appliance industry, the market saw relatively abundant orders during the period.
Asian Metal: What do you think of the domestic NGO electrical steel market trend in Q3?
Mr. Yang: As the third quarter of a year is the traditional off-season for NGO electrical steel market, the downstream demand would not improve. However, due to limited room for steel mills to cut prices, it is expected that domestic prices of NGO electrical steel will remain stable on the whole in the third quarter. Taking Sha Steel’s NGO electrical steel SG50W800 as an example, the prices are expected to fluctuate slightly at around RMB5,000/t (USD689/t) in Q3.
Asian Metal: Does your company have new development plan in 2023?
Mr. Yang: Yes, in order to better meet our clients' requirements, we plan to increase the proportion of high-efficiency and high-grade NGO electrical steel products in 2023, such as 350, 300 and 270. In addition, according to the needs of clients, we will also increase the order quantities from Bao Steel, WISCO and other steel mills.
