How can the steel trade industry adapt to the "new normal"?

Under the "new normal," the most important thing is to maintain peace of mind

Nowadays, China's economy has slowed from high-speed growth to medium-high-speed growth, and the driving force for pulling steel demand will also be weakened. There is no doubt that this will have a greater impact on the domestic steel market. On July 24, Wang Liqun, deputy secretary-general of the China Iron and Steel Association, stated at the National Coal Trade Fair in the summer of 2014 and the Fifth Northeast Asia Coal Trade Fair that the steel industry has entered a “zero” profit period and has become the “new normal”. Despite the decrease in raw material costs, steel prices have risen weakly, resulting in the industry entering a “zero” profit period from a meager period.

With the downturn in the steel industry, the steel industry has already entered a new phase of low-speed growth and structural adjustment. Ren Qingping, vice chairman of the Shanghai Steel Trade and Commerce Association, said in an interview with a reporter from China Metallurgical News: “In the future, relying on the country’s large-scale investment to drive economic development will no longer occur. The contradiction between excessive steel production capacity and insufficient demand will further intensify. The competition facing the steel market will be more intense."

Under the new situation, the “dark winter” of the steel trade circulation industry may be even longer, and steel traders will also face more severe tests. Industry experts pointed out that steel traders must maintain a clear understanding, abandon hopes that the country will stimulate the economy on a large scale, and promote the improvement of the steel market, but also abandon pessimistic disappointment. The real way out is to maintain a balance of mind, based on reform and innovation, and find their own way of survival.

It is understood that many steel operators have already made ideological preparations for the impact and challenges of the steel industry. Luo Yafen, general manager of Shanghai Chenfa Industry and Trade Co., Ltd., specializing in the trading of boilers and container boards, briefed the reporter: “The situation of oversupply in the steel market will continue to extend. It is impossible for steel traders to imagine a huge profit in the past. It is necessary to maintain a sense of balance, to abandon windfall illusions and unrealistic thinking, to focus on customer service, and to realize the value of traders in their services."

In the same way, Sun Qin, general manager of Kaiyueyi Industrial Co., Ltd. of Shanghai, also stated: “Under the environment where steel is in the 'buyer's market' and steel trade enters the era of meager profits, steel trade companies do not seek wealth, only seeking smoothness, smoothness, and survival. More steel trading companies are making efforts in business philosophy and marketing model innovation, and in response to the transformation and upgrading, they will meet the new challenges of the 'new normal' and seek for the survival and development of the company."

For the steel trade industry, the new situation has brought new challenges and forced the steel industry to reshuffle. Under the new situation, the mode of economic growth will shift to an innovation-driven growth mode that depends on transformation and upgrading and productivity enhancement.

Therefore, under this premise, transformation and innovation have become the only way for steel traders to survive. At present, steel trade enterprises are evading market risks to the greatest extent by means of transformation and innovation, and strengthening their defensive capabilities. In recent years, the number of steel traders who have embarked on the transition has increased year by year, and the methods have become increasingly diversified. This is actually a steel trader’s self-improvement in responding to new challenges. It is also an opportunity for steel traders brought by the “new normal”.

Based on the industry, do a fine line of old

Speaking of the transformation of steel traders is nothing more than two roads. One is to adjust and upgrade based on the industry, and the other is to involve the innovation and development of other industries.

Based on the adjustment and upgrading of the industry, it is based on the original model to carry out business diversification and specialization, and it will do a solid job and make it stronger.

First of all, for steel traders, the most important thing is to change the traditional low-sucking and high-throwing profit model and upgrade to gaining benefits from end-user value-added services. Under such circumstances, steel traders' competition will shift from homogenization to differentiation, and steel traders with poor competitiveness will be eliminated.

For example, most of the traditional steel traders began to pay attention to the improvement of comprehensive efficiency. In the past, when the market was in a good situation, many steel traders considered to make the company bigger. Under the current new situation, more and more steel traders are trying. Develop your business in a professional direction. For example, some steel traders turn from middlemen to the downstream to supply the terminal; some steel traders continue to introduce rare varieties to meet the custom needs of customers.

Zhang Dongyong, general manager of Shanghai Gequn Trading Co., Ltd., considered how to do a better job for customer service. Through meticulous pre-sales, sales and after-sales services, customers feel that their interests are valued by businesses, thus consolidating sales channels. Nowadays, the channel is the market, which is the profit point of the trading company.

Coincidentally, some steel trade companies have put forward the business concept of "lossless" supply for customers and sales methods. Shanghai Youjia Steel Trading Co., Ltd. is mainly engaged in various types of steel and sheet metal. They found that end-user waste in the use of steel is relatively common, and its steel utilization rate is 80% to 90%. Originally, when the customer purchased, the specifications and dimensions of the profile steel were longer than those actually required, and the width was somewhat larger. When the customer actually used the steel, the steel was not fully utilized. After knowing the user's use situation, the steel trade company provided the steel section processing and distribution plan before sales, and after the user's approval, the company's steel utilization rate was obviously improved, basically "no loss", an engineering project saves money for the user. Several hundred thousand yuan.

Secondly, steel traders must increase their integration with the entire steel industry chain, increase the value chain, and increase their profitability. Some steel traders have instigated deep services from processing services to logistics distribution under the new situation, and completed the transformation and upgrading to service providers.

The boss of a steel trading company put forward a tolerant attitude, cooperated with steel production companies and large-scale trading companies, huddle together to warm up and tide over difficulties together. The steel market competition under the new situation is not the competition between individual traders but the competition of the entire industry chain. This requires a spirit of cooperation, cooperation with other teams, cooperation with steel mills, cooperation with large steel traders, cooperation with peers, and a road to win-win cooperation.

At present, many steel traders pay attention to establishing contractual relations with upstream steel companies, and cooperation with downstream companies is relatively loose, and cooperation in the entire industry chain is not solid. Therefore, some steel trading companies have proposed setting up strategic alliances with the downstream terminal steel industry to build a supply chain. Shanghai Youjia Steel Trading Co., Ltd. established a strategic cooperation relationship with machinery manufacturing companies. The order contracts contracted by this machinery manufacturing company were all supplied by this steel trading company. Steel prices are locked at both ends. This relationship with the downstream end-users' new supply chain transforms the simple trading relationship into a cooperative and win-win relationship where risks are shared, making the industrial chain and supply chain become value chains, thus greatly enhancing steel trading companies. Profitability.

Second, steel traders must be prepared for “electric shock” and “touching gold” and make full use of it.

Under the new situation, the reform of the steel industry through the general trend of the trend, the combination of electronic trading, spot trading will also become a normal state, the impact of the traditional circulation business. Under such circumstances, many steel traders have changed their business philosophy and sales model to combine spot and electronic transactions and transactions to hedge, thereby locking in profits and avoiding the risk of price fluctuations. According to the latest statistics, the number of domestic electronic trading platforms involving steel has increased to more than 150, and the number of new platforms built in the past two years has exceeded 40%. In today's increasingly difficult development of the steel industry, traditional steel traders are embarking on a transition to becoming an e-commerce business. This is a way of innovation and development under the “new normal”. Some steel trade company operators who have been “electrically shocked” have mentioned that ** and e-commerce platforms have a “leveraging effect” with respect to the use of funds. In the long run, the ** market and the spot market tend to be in line with each other. Then, steel operators can buy ** contracts in the ** market while buying steel in the spot market. To be at the right price, sell steel in the spot market and open positions in the ** market. As a result, it not only meets the requirements of spot products, but also evades the risks caused by falling steel prices.

Jump out of the industrial cycle and get involved in diversified development

Under the background that the entire steel industry chain is at a low point, another group of steel traders have chosen to jump out of the industry cycle, involve other industries in innovation and development, and increase their own competitiveness.

According to the author's understanding, the business cards of many steel traders are also printed in addition to the steel trade business of the Bank, but also involve other industries. The transformation of iron and steel enterprises is not a minority of real estate development, export trade, equity investment, furniture market, and pawn shops. Recently, some companies have started to look at trade in printer chips, agricultural products, and imports and exports that are not related to the steel industry. The great can not help but make people wonder. The transformation of steel traders to other industries has not only enriched their own business models and profit models, but also increased their choices for companies and capital mobilization.

In addition, the involvement of overseas investment is also a typical example of steel traders' countermeasures. At present, the domestic steel market tends to be saturated, and some steel traders boldly innovate to expand their business to other countries, not only opening up overseas markets, but also increasing their own new profit growth points.