Interview with Shan Ruyang, General Manager of Xinjiang Energy Group Supply Chain Company
Xinjiang Energy Group Supply Chain Co., Ltd., which is a subsidiary of Xinjiang Energy Group and was founded in January, 2013 with a registered capital of RMB10 million, focuses on wholesaling coal and specializes in comprehensive service of energy resource supply chain, investing energy resource, coke, semi coke, heavy oil, fuel oil, chemical product, petroleum products, petroleum coke, naphtha, wax oil, clean fuel oil, pitch, lubricating oil, ore products, metal materials, building steel, sales of mechanical and electrical products, cargo handling, warehouse service, equipment leasing, coal washing, steel and aluminum processing, information consulting service, importing and exporting various products and technologies and international freight forwarder.
Shan Ruyang: Provide supply chain integration service for energy resources industry
----Interview with Shan Ruyang, General Manager of Xinjiang Energy Group Supply Chain Company
Asian Metal: Hello, Mr. Shan, thank you very much for the interview. Could you please introduce your company’s operation plan and direction as a burgeoning company?
Shan: Our company focuses on providing supply chain integration service with such energy resource industries as coal, petroleum and minerals for coke and coking industry chain, coal power and aluminum industry chain, coal power and steel industry chain as well as petroleum refining industry chain.
Asian Metal: What are your company’s advantages?
Shan: Our company has excellent capital advantages and strategic planning. It builds industrial chain operating system which will breakthrough traditional thinking according to advanced experience and practices at home and abroad with resources transformation strategy in Xinjiang, and new business model of supply chain integration service is established for upstream and downstream energy resource supply chain with strategic planning as well as operating mechanism of financial instruments, operational network, upstream and downstream clients and management team, aiming to play an important part of strategic management platform in Xinjiang.
Asian Metal: What changes have been occurred in steel market in Xinjiang in recent years?
Shan: The output of steel amounted to 11.38 million tons in Xinjiang in 2012. Demand for steel products surged as economic construction develops rapidly in Xinjiang with supporting policies from central government as well as some provinces and cities. However, steel market remains sluggish in Q2, and profits of steel industry plunged which posted RMB1.3 billion, RMB1 billion, RMB260 million and RMB150 million in the first four months. Steel market keeps weak mainly due to oversupply. Domestic output of crude steel totaled 258 million tons in Jan-Apr, up by 8.4% year on year, and a half of the increase of 20 million tons have been put in warehouses. Generally speaking, demand for steel is good this year, but it is still weak considering rapidly releasing production capacity. Some new steel mills will come on line in Xinjiang this year, and the market will also see oversupply which is difficult to be solved.
Asian Metal: What do you think about current iron ore market in Xinjiang?
Shan: Measured resources of iron ore amounted to 1.19 billion tons in Xinjiang. The output of iron ore raw ore totaled 30.03 million tons in Xinjiang in 2012. Some mine enterprises anticipated that demand for steel will reach to a peak with engineering construction of new-type urbanization and indemnificatory housing and infrastructure construction of railway, highway, coal power and coal chemical as well as supporting projects, thus prices of iron ore fines will go up with increasing steel prices. However, iron ore market will enter into its winter with weak steel market in Xinjiang, and the contradiction between supply and demand of iron ore is unlikely to solve.
Asian Metal: Bulk commodity has been gradually financialized in recent years, for example, the Platts index of iron ore determines market prices. What do you think about that?
Shan: Energy resource industry should combine with finance in order to develop. The problem of operation of bulk commodity is fund, and we also hope to link supply chains by financial measures with financialization based on the idea of the company. Cash is the king, and enterprises who have sufficient cash will survive the winter of the market.
Asian Metal: How long do you think the winter of the market will last?
Shan: China’s steel industry is morbid, and a sound industry will survive the winter, but not the morbid one with two aspects: firstly, China’s steel industry sees oversupply. Domestic output of crude steel reached to 258 million tons in Jan-Apr, up by 8.4%, and social stocks of steel keep extremely high. Secondly, capital chain controls steel enterprises those have no choice but continue to expand the output despite losses. Players keep watching and have no solutions for the morbid situation which is unlikely to recover this year.
Asian Metal: What is your forecast toward steel market in H2?
Shan: Steel market will stay weak in the second half of this year, and no recovery will be seen until early 2014.
Asian Metal: Thank you again for receiving the interview. We wish you successful work and flourishing business of the company!
