Committed to be the pioneer of cost solution and professional service in steel export industry

Asian Metal: Good afternoon, Mr. Luo. Thanks a lot for agreeing to the interview. Please could you briefly introduce your business scale and main products?

Law: It's my pleasure. We mainly deal with the export of flat steel such as HRC, CRC, steel plate and galvanized steel, with the yearly trading volume of 100,000 metric tons. We are serving different industries, like pre-engineered building manufacturing, ship building, electrical appliance manufacturing, pipe manufacturing, machinery manufacturing, etc. Meanwhile, we also provide construction steel, accessories and ancillary equipment for project customers.

Asian Metal: Which domestic mills do you mainly cooperate with? Where are your materials exported to? How about customers?

Law: We have built harmonious and steady relationship with major domestic producers such as Shougang Steel, Tangshan Steel, Bengang Steel, Laiwu Steel, Jinan Steel, Nanjing Steel and Xinsteel as well as private steel mills nearby Tianjin and Shandong.

We follow the national “Belt and Road Initiative” guidelines and deliver materials to 53 countries and regions including Southeast Asia, South Asia, the Middle East, South America and Eastern Europe.

Owning four processing centers, we mainly sell materials to end users directly.

Asian Metal: How about purchasing activities of overseas buyers this year?

Law: Generally speaking, the demand from most overseas markets is steady in 2019. However, that in some countries and regions, such as the Middle East, shrunk a little because of political instability. Meanwhile, some countries experienced the "Election Year", and projects were suspended before the election, but restarted following policies from the new government, hedging the reduced demand. Besides, the tight dollar reserve in certain countries also dragged down the purchasing power.

Asian Metal: Following the decreasing trend in Chinese domestic market, export prices for HRC kept going down since late July, with the markdown of around 9%. What do you think are the reasons for the price crash?

Law: Absolutely, export prices of HRC have dropped by approximately by USD50/t in recent two months. I think we can analyze this situation in the following three aspects.

1. High supply. Output for finished steel in China reached 100 million metric tons each in July and August of 2019, witnessing YOY hike of 10%.

2. Reduced demand. Property and fundamental investment witnessed slower increase this year, and output from automobile and home-appliance industries kept decreasing.

3. Negative peripheral news. The escalation of the trade war between America and China weakened Chinese domestic market participants' confidence in the market prospect to a large extent, and prices decreased inevitably.

Asian Metal: As far as I learnt, major producers such as Bengang Steel, Shagang Group, Ansteel, WISCO and Xinsteel announced the decision to overhaul HRC production lines in September and October. Besides, mills tend to hike export to transfer domestic sales pressures. How do you think the HRC export price trend in Q4?

Law: Yes, more and more mills released production cut plans when it entered September. However, it failed to boost the domestic and export markets when the absence of rigid demand is taken into consideration. Even though the market price rose slightly, it could not last for a long time. Personally, I believe the HRC export price will witness another markdown of USD20-30/t in the remainder of 2019.

Firstly, increased overseas supply restrained our exports. At present, almost all the countries in the Belt and Road region increase long steel production. Besides, there will be new flat steel production lines in Southeast Asia and South Asia in the forthcoming 3-5 years.

Secondly, price declines in other countries such as Russia, Ukraine and India will surely drag down prices from China.

Thirdly, the depreciation of RMB also forced export prices for flat steel to go down.

Asian Metal: What's your biggest challenge at present? What about your advantages?

Law: As a high-quality steel export service provider, the biggest problem we are facing is the capital shortage. Banks have tightened loans to steel enterprises in recent two years, hampering our new business.

Our advantages are mainly reflected in three aspects.

1. Strict business rules. By adhering to the principle of “reputation and commitment come the first", we endeavor to guarantee the quality and deliver date in strict accordance with the contract.

2. Professionalism. Started by steel processing, we have a strong sense of service to end users and can meet the needs of overseas customers intimately.

3. Excellent and experienced export team. The core business personnel in the company are required to possess 5-15 years of steel export experience, excellent foreign language skills as well as perfect problem-solving abilities. Besides, we have document operators with more than 10 years of experience, which satisfies customers' different payment methods and provides detailed import clearance services.

Asian Metal: Statistics from China Customs showed that China exported around 5 million metric tons of finished steel in August, down by 10.1% MOM and 14.8% YOY. Obviously, the steel export business is hard to run. What is your expansion plan in response to the current export dilemma? How about the progress?

Law: Actually, our export volume keeps rising, despite the gloomy economic environment. The core reason is that we endeavor to promote after-sales service and make brand effect through customers' trust and recommendation.

Presently, we are still focusing on steel international trading. We maintain existing customers while tapping potential customers.

Asian Metal: Thanks so much for your time. Wish Runfei Steel a great success in the future.