China's 21st Century Business Herald reports that many downstream steel traders are mulling over a regrouping under the M&A of steel enterprises in China
Analysts unveiled that the catalyst behind the move is the change of trading, pricing and circulation with China's steel trading market rapidly becoming an e-business.
Mr Li Wenjie, GM from Shougang, told reporters that there have been several changes in the Chinese steel sector in the past year. Firstly, the management of steel trade has been changed. It is also possible to sustain losses even holding cash and resources compared with the past.
Mr Li noted that meanwhile the pricing basis of steelmakers has become diversified. Taking the information platform as a reference is most important for Shougang which can also control traders’ profitability levels. He added however that steel producers are beyond the control of traders’ sales price.
Mr Li said that steel futures will turn out to be more and more important in China. Hence, it is quite difficult to judge price trends according to the relationship of supply and demand.
On the other hand, most Chinese steel enterprises are facing with disordered logistics, enhancing their costs as well as impacting on the steel market price. Fortunately, relative departments are establishing new regulations to solve such problems, He Liming, executive vice president of China Federation of Logistics & Purchasing announced at a forum on January 4th 2010.
Under such circumstance, lots of steel enterprises are struggling to construct professional trading platform and use advanced IT technology to fulfill rational collocation.
Source: Steel Guru
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