Serious overcapacity enterprise widespread loss of domestic steel prices lift new round of "sea" tide

Updated: October 20, 2015  Views: 76

Social business Oct. 20 hearing

In the winter of deep industry background, domestic steel prices once again set their sights overseas. Beijing Daily Reporter recently learned that Wuhan Iron and Steel will build in Liberia in West Africa and operate a joint venture steel plant. The industry believes that, unlike the last time during the capacity expansion The 'sea', the aim is to set up factories overseas steel prices for the domestic excess capacity to seek appropriate 'place to live', but also to save transportation of iron ore raw manpower, material resources, money, time to pay, reduce logistics cost, but steel prices 'sea' still need to guard against political, legal, labor, environmental and other risks.

It is reported that this steel mill Wuhan Iron and Steel will rely on the development of state in Liberia had mine capacity. Liberia mine is state-led development of Wuhan Iron and Steel's first overseas mine, in July 2013 put into operation in February 2014 began to be shipped back to the domestic iron ore .

In fact, the Wuhan Iron and overseas factories is not a case, in recent years, China's steel industry is set off a wave of overseas factories. Earlier this year, Maanshan Iron and Steel Group, China's largest steel companies, China Metallurgical Corporation and FerrumCorp. Company Kazakhstan signed a 1 million tons / year integrated steelworks project joint venture memorandum.

Last September, Hebei Iron and Steel Group and the Industrial Development Corporation of South Africa, Africa Development Fund reached a cooperation started five million tons of steel projects in South Africa.

Analysts 刘新伟 told Beijing Daily reporter said that at present China's steel enterprises overseas to observe construction is not difficult to find, mainly for the production of energy demand, abundant iron ore resources, low labor cost areas, such as Southeast Asia, Africa and West Asia . Such an approach not only can absorb excess domestic capacity, can save manpower, material and other costs for the enterprise multiple.

Data show that in 2014 crude steel production was 823 million tons, in 2014 China's crude steel production capacity of about 12.5 million tons, while in 2014 only 702 million tons of steel demand.

And in the context of serious excess capacity, starting in 2011, steel prices will nosedive, the main rebar futures contract from 1601 up to 5283 yuan / ton, fell now 1826 yuan / ton, according to CISA's statistics, last year, six months, the association included in the statistical range of medium-sized steel enterprises realized sales income of 1.5 trillion yuan, down 17.9%, a loss of 21.68 billion yuan main business.

'From the most intuitive profit per tonne, the peak can reach 1,000 yuan. After a gradual decline to one kilogram of pork, a bottle of mineral water level, while the first half of this year, profit per ton of steel was only 0.43 yuan, also enough to buy a Popsicle. 'Yu Ming Jing analysts said.

Xiamen University [microblogging] Director of China Energy Economic Research Center Lin Bo [microblogging] noted that overcapacity is steel prices have been the main reason for overseas factories, resulting in an oversupply market steel prices continue downward, become a loss, the main culprit narrowing profit .

Although steel prices have overseas factories, but to remind the iron and steel industry enterprises 'going out' must be fully aware of the political, legal, labor, environmental and other risks will be faced with.

In fact, China's steel enterprises 'going out' the road has not been easy. In October 2007, the largest steel group Baosteel Group announced the world's largest iron ore producer CVRD, Baosteel Victoria Iron and Steel Company, a joint venture in southeastern Brazil But since the end of 2008 led to the global financial crisis, various steelmakers to slash steel producer, Baosteel Group canceled the project, and Baosteel Victoria Iron and Steel Company were liquidated. Again, Shougang has acquired a Peruvian iron ore company. However, the local employees often through strike to demand a pay rise and increase benefits, seriously affected the normal work plans and costs.

'Although the current iron ore price is relatively low, and cheap labor in emerging markets, the EIA standard is low, but the entire global steel market is still oversupply, in this context, overseas factories should be careful to reduce market risk.' Boqiang said.

In the industry experts, in addition to market risks, foreign investment has risks in the political, economic, cultural and other aspects, while China's steel enterprises to gain experience in this area is still far from enough, 'sea' is still a long road of success.

(Source: Beijing Daily)


www.get-top-news.com Get Top News, Latest News and Current News from get-top-news.com. Latest Current News: U.S., China, World, Entertainment, Health, Finance, Business, echnology, Travel, Politics, Sports.

Related Finance