| The winter comes
"Winter" becomes the highest mentioned word in this seminar.
Research centre director of Shanghai Ganglian E-commerce Co., Ltd., Mr. Yu Liangui pointed out that domestic steel composite price index reached the highest 219.9 points on June 6 this year, up 30.2% than the end of last year. However, by the end of this October, the steel index substantially dropped to 133.4 points, slumped over 40% compared with its highest point. So far, steel price harvest has been overwhelmed this year. Sources called this situation as "panic fall".
The fastener steel market also underwent ups and downs. It is learnt that in early July this year, the 45# hard-line reached the highest 6755yuan/ton, sharply climbed over 90% compared with 3543yuan/ton in early 2007. Whereas, it slumped 3155yuan/ton at the end of October which fell by 46.7%, even lower than the current price of carbon steel wire. By the end of October, the domestic price of 45# carbon round bar went down by 2680yuan/ton of 41.7%. The price of 40Cr alloy steel dropped to 2480 yuan/ton of 36.5%.
Sharp fluctuations in steel price had an infaust impact on fasteners enterprises. According to the introduction of Mr. Feng Jinrao, chairman of fasteners branch in China General Machine Components Industry Association, one third of the fastener enterprises went into bankruptcy due to the impact of the financial tsunami, "severe winter arrived ahead of schedule."
Difficult to forecast
As it is full of too many uncertainties, the participating representatives expressed that it was also difficult to estimate how long the depression would last.
Research centre director of Shanghai Ganglian E-commerce Co., Ltd. Mr. Yu Liangui considered, in view of the colossal foreign loans of the United States, in the long term, when the U.S. economy got better, the dollar depreciation state would continue and might play a stimulative role in commodity price recovery. However, it is likely that the global economy still need more than one year for adjustments, which has limited power in pulling various commodities prices (including steel). Currently the economic weakness in China market will still last for some time, but China's economic growth potential and the government's determination to promote economic growth should not be underestimated. China will usher in a new round of economic prosperity after the short-term economic adjustment.
As for steel, in Mr. Yu's opinion, recently the steel price is in the trend of oscillational dull and there may be a certain recovery within this year under the circumstances that the steel mills still continue to yield reduction greatly. Steel production capacity and global economy are the most uncertain factors next year. Once there is profit space in the steel products, rapid release of production capacity would be inevitable. Considering the global economy may keep falling next year, together with the threat of production capacity, the steel price is expected to remain stagnantly next year.
Take advantage of opportunities
Enterprises are not helpless under current state
Mr. Feng Jinrao, President of China Fastener Industry Association gives suggestions to the enterprises from four aspects: product, market, resource and price. He believes that China fastener enterprises should make efforts in high value-added products; adjust the ratio of domestic and foreign markets, guide enterprises towards dislocation competition; strengthen cooperation with steel enterprises and enhance core competitiveness in resources adjustment aspect; match with cost, market and value in price establishment aspect.
"Understand the new requirements of both sides," Secretary-General of Special Steel Enterprises Association Mr. Hu Mingyang also believes that it is necessary to strengthen communications with downstream enterprise to get their latest requirements in time in the future development. "The most important thing is not the arrival of the market winter, but the arrival of consumer's psychology winter.", Mr. Wang Jianguo, Secretary of the Shahe City Committee of the CPC told the reporter, the reasons why Shahe fasteners market forge in countercurrent is because: In addition to a reasonable allocation of funds before, it is a good opportunity to undertake the transfer of industries now, to train and test the perceiving ability of the government and enterprise. To our delight, the market also provides the enterprises with a platform from export to domestic sales at the right moment.
Sources indicated, "Hope that enterprises will take advantage of opportunities, well prepare, observe and operate carefully."
Source: Yanzhao Metro Daily
Translated by Sandy
www.chinaFastener.info
2008-11-28 17:48:00 |
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