Chu Liang: It is imperative for stainless scrap traders to optimize the business structure

Asian Metal: Mr. Chu, thank you very much to accept the interview. Currently the price of stainless scrap has dropped to the lowest point since the financial crisis year of 2008. Do you think it will go down further in coming weeks?

Chu: Most participants are watching the market cautiously for the moment. Seeing the current price is running at a low level, I do not think it will decline again in the near future. Furthermore, since traders are not so confident of the coming market, they are inactive in supplementing inventories, restraining the price from decreasing.

However, I do not think the price will rebound significantly in the short term. To specify, influenced by the power rationing, local stainless steel producers were forced to halt production for one or two days per week. In the meantime, the government stressed the overhaul of transformers and to avoid the inspection, some producers stopped producing directly. As far as I know, there are nearly one third of stainless steel mills are on holiday right now.

Besides, because of hearsay of enterprise boss "who run away to avoid paying loans", banks all restrained the lending to stainless steel producers and the whole industry suffers serious capital shortage. To avoid potential risks, most mills just arrange production according to orders. Taking Yuandong Stainless Steel Co., Ltd. for an example, currently there are over 300 workers totally and I plan to dismiss employees in the coming week since the stock pressure is serious.

Asian Metal: I also heard that there are 300 mills out of 1,000 in Dainan have gone bankruptcy. So what a producer should do to survive under the competion as well as the slim demand in your opinion?

Chu: In my opinion, first and the most important is to guarantee the quality of products. As the saying goes "One thousand visits from one person are more precious thant those from a thousand ones". We should work harder to meet fixed customers' requirements and offer qualified services.

Besies, to find new ecnomic growth point. I plan to add the business of presion casting, flat and bar steel next year. Currently the stainless scrap industry faces serious competion and enterprise development is uneven, leading to a low profit. To enlarge the market share, I established a sales branch in Guangdong Province this May, mainly selling finished stainelss steel.

Asian Metal: The price of the raw material-nickel rose twice from the beginning of 2013, but that of stainless scrap failed to follow suit obviously, so what is the reason in your opinion?

Chu: Actually traders do not concern price changes of nickel so much as before, since it kept fluctuating with the negative-positive news in the international market but failed to reflect the market demand truly. As for stainless scrap, what matters is the demand from downstream industries, but unfortunately it remains weak for the time being. As I have said before, the whole industry suffers serious capital pressure and downstream customers could not afford to place orders in large quantities. In addition, influenced by the gloomy economy all over the world, foundries get fewer orders, thus the demand for stainless scrap shrinks accordingly.

Asian Metal: Will urbanization polices issued by the new government play some positive effect on the stainless scrap market?

Chu: I do not think so. The urbanization will activate the carbon steel market but as for stainless steel, its stimulation is rather fragile since stainless steel products are mainly used to machines and only stainless doors and windows are used to housings.

Asian Metal: Will you expand export?

Chu: I once negotiated with a client from Singapore before but failed to cooperate later. So I mainly focus on the domestic business now.

Asian Metal: Thank you again for accepting the interview.

Chu: Thanks. We appreciate supports from Asian Metal.