Chinese GO electrical steel prices are likely to go up again in the future

Asian Metal: Mr. Lei, thank you for taking our interview. Please introduce your company briefly.

Mr. Lei: Thanks. It is a great honor to do the interview. Our company is currently mainly engaged in both grain oriented electrical steel and non-grain oriented electrical steel from domestic and overseas steel mills in Japan and South Korea. The monthly trading volume is about 500 tons. Since the establishment, we always adhere to the principle of "quality first, customer first, quality service, abide by the contract," and sell materials in more than 30 provinces, municipalities and autonomous regions with high-quality products, good reputation and excellent service.

Asian Metal: Prices of NGO electrical steel have gone through a continuous decline in recent months, but those of GO electrical steel have been on the rise. What do you think is the reason for the price increase?

Mr. Lei: That's the case. Since August, domestic prices of GO electrical steel especially low-grade materials have increased by about RMB2,000/t. I think the price rise is mainly caused by the tight supply and the continuous price increase of steel mills.

Since July 23rd, 2016, China has imposed anti-dumping duties on imported electrical steel products originating from Japan, South Korea and the European Union, with a tax rate of 37.3%-46.3% and duration of five years. This greatly restricts imported materials with low prices into the country.

In addition, WISCO has shut down two production lines of low-grade GO electrical steel for almost half a year, and when to resume the production is still unknown. Some private enterprises are also unable to maintain normal production for various reasons.

Asian Metal: How about the demand from the downstream industry at present?

Mr. Lei: At present, the demand from downstream customers has not improved significantly, and the demand is basically equal to the previous two years.

Asian Metal: Domestic mainstream steel mills such as Baosteel and WISCO have increased their prices of GO electrical steel continuously in recent months, but the supply is tight. Is there any improvement in this situation at the moment?

Mr. Lei: In the past months, domestic steel mills such as Baosteel and WISCO kept raising their prices of GO electrical steel and the increase was more than RMB200/t each time. However, the tight supply of materials is still going on because of the fact that two production lines have been shut down in WISCO.

Asian Metal: Most traders have significantly decreased their stockpiles in order to reduce risk. How about your current inventory?

Mr. Lei: The purchase cost has increased continuously because of higher steel mills’ list prices these months. In order to reduce the risk, we have also decreased the stockpile. Our current inventory keeps at 200-300 tons, which used to be no less than 500 tons.

Asian Metal: what do you think of the market trend at the end of the year?

Mr. Lei: Prices of GO electrical steel in domestic market did not change much this month. Among them, prices of low grades were quite firm mainly supported by the low market inventory, while those of high grades went down slightly due to the increased supply. Domestic steel mills have raised their list prices by RMB200/t for next January production and the markup is lower than previous moths. Although GO electrical steel market trend is still upward, the price increase will be limited as demand is weakened near the end of the year.

Asian Metal: Do you have any new plans and goals in 2018?

Mr. Lei: We will deepen the silicon steel processing service to better meet the needs of different customers. In addition, we will also actively expand the new business in the new energy car industry.

Asian Metal: Thank you for your support and wish your company a great success in the future.