Steel prices likely to increase
----Interview with Cui Lianfu
Sales Director
Shanxi Jianlong Steel Co.
- Shanxi Jianlong Steel Co. adheres to the spirit of "strive for the first, start from the bit," and the core values of "integrity, rules, team, excellence, win-win" since the establishment. The company's products cover more than 130 varieties and 220 specifications of high-strength, corrosion-resistance, fire-resistance construction steel, cold forging, welding and drawing wire rod, low-alloy, high-strength, automotive pipeline hot rolled coil and steel strip, deep drawing, galvanized, galvanized aluminum magnesium, color coating cold rolled coil, steel pipe and coil scaffolding. The company has won the top 100 private enterprises in Shanxi Province for four consecutive years from 2019 to 2022.
- Asian Metal: Good afternoon, Mr. Cui. Thank you for attending the interview of Asian Metal. Please briefly introduce the development process and equipment composition of Shanxi Jianlong Steel.
- Mr. Cui: My pleasure. Shanxi Jianlong Steel Co., formerly known as Haixin Group, joined Beijing Jianlong Heavy Industry Group Co., Ltd. in September 2015. Shanxi Jianlong Steel has subsidiaries such as Jianlong Beiman Special Steel Co., Ltd., Malaysia East Steel Group Co., Ltd., Jianlong Acheng Steel Co., Ltd., Jianlong Xilin Steel Co., Ltd. and Lvliang Jianlong Industrial Co., Ltd. With an annual production capacity of 5.6 million tons of iron, 6 million tons of steel, 3 million tons of high-quality construction steel, 3.6 million tons of HRC, 1.6 million tons of special steel strip, 1.5 million tons of CRC, 1 million tons of high-quality steel pipe, Shanxi Jianlong Steel has 5 blast furnaces (630m3, 630m3, 1080m3, 1380m3, 1,680m3), 4 converters (100t, 100t, 120t, 120t). We have a set of 500,000t of high-speed construction steel plant, with one 600,000t and1.3 million tons of rebar rolling line each. We have one 1,500mm HRC production line and one 850mm HR strip line. In the field of deep processing, we have one 850mm CR strip line with an annual production capacity of 800,000t, one 1500mm CRC line with the annual production capacity of 700,000t and one 1 million tons steel pipe production line.
- Asian Metal: At present, which market do you mainly face up to, and what kind of customers do you mainly service?
- Mr. Cui: We mainly deliver steel to Shanxi, Shaanxi, Beijing, Tianjin, Hebei, Xiongan New Area, Henan, Sichuan and Chongqing and so on. In terms of construction steel, our factory set up Jianlong Steel Customer Processing Center in December 2019, dealing with the processing of construction steel sorting, steel hydraulic shearing, steel bending, steel sawing wire, intelligent stirrups, welding mesh and other products, with an annual processing capacity 80,000t of formed construction steel, 30,000t of metal mesh and 20,000t of fixed size material (1.5-12 meters of fixed size material). This center serves clients within 500km. In terms of customer groups, in addition to eight central enterprises such as China Railway Group Limited, China Railway Construction Corporation Limited, China Railway Materials Group Corporation, China Communications Construction, Shaanxi Construction Group, China Energy Engineering Corporation Limited, China North Industries Group Corporation Limited, China National Nuclear Corporation, we maintain harmonious cooperation with well-known housing enterprises and local municipal units. Since the beginning of this year, the proportion of direct supply of construction steel achieved 55%-60%, against 48% last year. In terms of HRC, we focused on optimizing customer structure and mainly deliver to northwest market due to the increase in demand from our own CR related lines since early this year. For cold-rolled related materials, we are still in the development stage and mainly supply materials in Shanxi, Shaanxi and Xinjiang. At the same time, we continuously improve supporting service capabilities and focus on reaching cooperation with local energy companies.
- Asian Metal: The government encourages various industries to "go abroad". Do you plan to start the steel exports?
- Mr. Cui: Absolutely. Jianlong Group promoted export as a strategic direction since the beginning of this year and strives to achieve the equivalent sales between overseas and domestic. The Group set up an export division in Beijing in 2023, focusing on steel export business.
- Asian Metal: What challenges do you face in export? How to resolve them?
- Mr. Cui: Lack of export experience and talents act as the biggest challenge for us at present. We actively investigate domestic and foreign markets and recruit talents with foreign trade experience. At the same time, brother-sister corporations such as Chengde Jianlong Steel, Heilongjiang Jianlong Steel and Jilin Jianlong Steel which have been involved in export business share their experience with us. We also actively learn from various partners and strive to promote export business.
- Asian Metal: What are your advantages in export?
- Mr. Cui: We have two advantages in export. Firstly, product diversity. Shanxi Jianlong Steel acts as the most comprehensive enterprise of Jianlong Group. In terms of construction steel, we have rich product structures and are familiar with high strength and corrosion resistance steel production. In addition, we're able to steadily produce up to 700 mpa of steel bars, while the current market regular strength is 400 mpa. In terms of flat steel, our products cover hot-rolled coil, cold-rolled coil, galvanized coil, aluminized zinc and zinc aluminum magnesium and other conventional and emerging products, which can meet customer's needs in an all-round way. Secondly, logistics. We have one special railway line direct to Jingtang port. At the same time, China Railway Taiyuan Branch reduced the railway transportation cost of our factory to 30%, and the price advantage keeps prominent. At the same time, we could export steel through Houma bonded logistics Center to take the China-Europe Railway Express and China-Central Asia Railway Express.
- Asian Metal: Prices of HRC went through the down-up trend since the beginning of the year, and turned to narrowly change from May. What do you think are the reasons?
- Mr. Cui: Prices of HRC kept going down from the Spring Festival till the end of March, and rebounded since the middle of April. From May, prices tended to stabilize. First of all, the confidence of market participants weakened right after the Spring Festival, together with the rising inventories and the low demand, leading to continuous price declines. The government released series of stimulant policies such as the trillion treasury bond, the loosening control on the property market and the urban village renovation, strengthening the confidence of market participants. Besides, the operation of downstream projects accelerated, boosting prices to go up. For the narrow fluctuations in May and June, they belonged to our expectations given the game strategy between the stimulant policy and the low demand.
- Asian Metal: How do you forecast the price trend in the second half of the year?
- Mr. Cui: We hold optimistic attitudes towards the market in the second half of the year and believe prices of construction steel might rise to about RMB4,000/t (USD551/t) in the third quarter, and those of HRC would increase to RMB4,100/t (USD565/t). On the one hand, the room for further markdown of raw materials limited and the cost support for finished steel keeps strong. On the other hand, the landing of stimulus policies and the release of demand. Moreover, the overseas recovery. More and more countries cut interest rates to release liquidity. The demand from India would recover after the General Election. However, we believe prices of steel would go down in the fourth quarter with the demand shrinking in winter.
- Asian Metal: Thank you Mr. Cui for your wonderful sharing! I wish Shanxi Jianlong Steel flourishing day by day!
- Mr. Cui: Thank you Asian Metal for this interview. At the same time, we sincerely welcome foreign trade elites to join Shanxi Jianlong Steel and create brilliance together!
