"Gold September" is not what it used to be, can HR steel market warm up in "Silver October"?

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

Mr. Sang: Shandong Lianying Plate Co., Ltd. was established in 2008. At present, we mainly deal in the spot business of hot-rolled coil and strip, and also undertake futures of fixed-rolling steel and vertical shearing flat processing business. Our standing stock is more than 5,000t, and the monthly sales volume is about 6,000t.

Asian Metal: Which steel mills do you mainly cooperate with? Which markets do you sell the products to?

Mr. Sang: Our company is the sales agent of Laiwu Iron and Steel Group (Laiwu Steel), and also has cooperation agreements with Taishan Iron and Steel (Taishan Steel), Fulun Iron and Steel (Fulun Steel) and Shangdong (Rizhao) Iron and Steel (Rizhao Steel). We constantly change our services according to the market demand. The products are mainly sold to the surrounding markets in Shandong province such as Weifang, Taian, Linyi and Qingdao. The customers are from Henan, Anhui, Jiangsu, Shanghai, Hubei and other places.

Asian Metal: Which industries are your steel products mainly used in?

Mr. Sang: Our steel products are mainly used in automobile manufacturing, cold-formed steel, machinery manufacturing, mining equipment manufacturing, shipbuilding, welded pipe, steel structure processing and so on.

Asian Metal: How is the hot rolled steel market in Laiwu at present?

Mr. Sang: The price of hot rolled steel in Laiwu is greatly influenced by the price policy of steel mills. In addition, futures market prices and price fluctuations of steel billet in Tangshan, Hebei province also have some impact.

Current mainstream prices of HR strip Q235B (685-865) mm*3.5mm*C and low alloy coil Q345B 1,250 mm*4.75mm*C are about RMB3,680/t (USD517/t) and RMB3,780/t (USD531/t) D/P in warehouse Laiwu, Shandong province, up by RMB20-30/t (USD3-4/t) respectively last weekend.

Asian Metal: Recently, many steel mills have announced the news of production line maintenance and output reduction. Will this bring some support to the market price?

Mr. Sang: In many places of North China, steel mills have been notified to decrease or shut down the production, while downstream processing enterprises have also received similar notices, so the relationship between supply and demand in the steel market has not changed significantly. At present, the inventory of steel mills and traders can well meet the market demand, and there is no price increase caused by the tight supply.

Asian Metal: At present, the steel market is in the traditionally high season of Gold September and Silver October. How about the demand from downstream customers?

Mr. Sang: Compared with the previous peak season of the steel market, customer demand in September of this year was relatively weak, and there was not a situation of booming supply and demand. Downstream processing enterprises were basically purchasing on demand, and traders were also reluctant to build large stockpiles, which was closely related to the recent fluctuation of steel prices in the spot and futures market. Of course, the sales performance in September was still better than that in August.

Asian Metal: What do you think of the market trend in Q4?

Mr. Sang: According to the financial data of industrial enterprises released by the National Bureau of Statistics on 27th September, the profits of domestic automobile and equipment manufacturing industry decreased considerably in Jan-Aug of this year, putting greater pressure on the price increase of raw materials. The uncertainty of Sino-US trade relations in the external environment also has a greater impact on market prices.

Therefore, the market trend in the fourth quarter is not clear at present. Hot rolled coil and strip prices are expected to fluctuate in the low range. If Sino-US trade relations begin to improve in October, the raw material prices are expected to rise considerably.

Asian Metal: What is the development plan of your company in the near future?

Mr. Sang: We will deepen the product processing service on the basis of maintaining the existing business, so as to better meet the individual needs of customers. In addition, we will also gradually increase the fixed-rolling futures business.

Asian Metal: Thank you for your wonderful sharing. Wish you a prosperous business!