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Seamless steel demand this year may fall into three Daosi Cheng

Date:2014-11-10 17:26:39

September, China's output of 2.56 million tons of seamless steel tubes, down 4.3%, which is today since the first four months in June year on year decline. In fact, by the end of September this year, the cumulative production of 2.333 million tons of seamless steel tubes, and compared to last year, an increase of only 1.2%.

Downward price changes in the external environment

The outbreak of the financial crisis in 2008 is not only the beginning of China's economic growth into the deceleration phase, but also China's seamless steel pipe industry by the gloom and doom of the watershed. Recovery of exports in 2009, and the "4 trillion yuan" stimulus policy implementation, once the recession slowed the pace of China's seamless steel pipe industry. However, beginning in 2011, with the economic stimulus to pull the weakening effect of the steel industry, China's seamless steel pipe industry has experienced nearly four years of continuous downward trend, not only still no signs of improvement, but there are worse.

Although China's seamless pipe market prices gradually recovering from the sudden drop in 2008 after the financial crisis, and in stimulating economic stimulus in the second half of 2010 and early 2011 was recovered to the level before 2008.

However, beginning in the second quarter of 2011, with the slowdown in the global economy, domestic production has peaked seamless steel, seamless steel demand at home and abroad are showing a declining trend.

A serious imbalance between supply and demand makes our seamless steel pipe industry gradually lost its independent pricing, is more about receiving raw materials and bulk steel prices.

Up to 4 years prices continued to fall, making the traders profit margins shrink, more and more traders out of the seamless steel pipe industry. Delisting traders not only seamless steel pipe business sales channels decreased, but also makes the "reservoir" role of the market weakened. Inventory gradually transferred to the upstream pressure seamless steel pipe manufacturers, steel pipe mill which financial strength of a higher requirement. Meanwhile, China's seamless pipe market in the long-term downward trend, decreasing corporate profits making seamless steel tubes and the emergence of the phenomenon of consecutive losses. Corporate debt increased year after year, more and more enterprises have closed down and the closure of seamless steel pipe.

Accelerated loss of internal decision-making errors

Loss of seamless steel enterprises is not only the market for a long time due to unilateral down market, more because of the blind expansion of business and investment leads to funding strand breaks. So far, China has a certain scale of seamless steel enterprises have been closed down more than 30, nearly 600 tons of production capacity has been shut down.

Since the collapse of seamless steel pipe business point of view, mainly the emergence of the following four conditions ultimately makes the enterprise funds strand breaks and shutting down:

The first one is strong enough on their own financial strength, long-term pressure downstream end-users shall lead to strand breaks of funds;

The second was in 2008 after the companies blindly yield new line, product prices and the financial strain resulting in depletion of corporate funds;

The third is a corporate cross-investments, such as investment in real estate, logistics and other industries, investment and Steel Plant's own failure eventually leading to a loss of funding strand breaks;

The fourth is a mutual guarantee among enterprises in recent years, and also a way to accelerate the collapse of related businesses. Looking back, those companies currently operating in good condition, there is no more blind expansion, steady pace of development of seamless steel pipe business.

Shandong, Jiangsu, Tianjin is a former ranking of seamless steel pipe production in three provinces, is the largest seamless steel distribution business areas. From 2013 to date rankings Shandong, Jiangsu, Tianjin Seamless Steel production trend can be seen, recently, Jiangsu, Tianjin production decline trend. Although this year's production in Shandong Province is still on the rise, but through field research found that a number of Liaocheng, Linyi, and other regions of seamless steel pipe production enterprises financial situation has been red. With the end of the year approaching, the year-end and tightened bank loan funds, and some steel plant can survive this storm is still unknown.

China has this year's economic slowdown is an indisputable fact that the annual seamless steel demand may fall three percent Daosi Cheng.

Four consecutive years of seamless steel downstream market, coupled with the seamless steel pipe business news frequently exposed tight money, making traders and downstream in the fourth quarter last year ordered the phenomenon is likely to reduce the large area in the year.

Through research found several large seamless steel dealers have made it clear that this does not make Dongchu, which makes seamless steel enterprise production operations in the fourth quarter of this year and next year the pressure late surge before the Spring Festival.

The fourth quarter of seamless steel consumption itself is off-season, a substantial decline in demand will make the competition more intense between Steel Plant, part of the cash-strapped steel plant in order to obtain an order to take price cuts have been inevitable.

But in the end, enterprises are facing repayment, but prices continue to fall, there may even be the lowest price all year. Under the dual pressure, some steel plant shutdown will be difficult once again up and running.

Expected end of this year and the first quarter of next year is likely to be some of seamless steel pipe business failures phenomenon. Not only that, for now, in 2015, the downstream demand is difficult to be improved, exports also face difficulties next year, downward pressure on the price of seamless steel pipe has not been lifted.

To survive, the competition between enterprises is bound seamless steel pipe more tragic, our seamless steel pipe industry, "shuffle" has begun

TypeInfo: Industry news

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