Foreign trade of steel enterprises must break vicious competition

In the context of weak domestic demand, the economic recovery of developed countries has led to a gradual recovery of the global steel market. Statistics from Qingdao Customs show that last year Shandong Port's monthly steel export volume increased substantially. In the first 11 months, a total of 7.534 million tons of steel were exported, an increase of 50.2% year-on-year.

At the same time, the monthly average export price of Shandong's steel products has accelerated and fluctuate. The average export price for the first 11 months of the previous year was 4,262 yuan per ton, down 12.9% year-on-year. In November, the average export price for the month was 4044 yuan/ton, which was the lowest value since 2007 and fell 2% month-on-month. Obviously, the increase in export volume comes at the cost of a reduction in profits. To ease the pressure on stocks and return funds, some companies have to reluctantly adopt a paltry export strategy.

The explosive growth of steel exports has exacerbated trade frictions between China and major exporting countries. According to statistics, in the first 11 months of last year, a total of 11 countries and regions initiated 60 trade remedy surveys against China’s steel products, an increase of 200% compared with 2013, including 13 anti-dumping investigations, 41 anti-dumping investigations, and 6 anti-subsidy investigations.

To make matters worse, at the end of last year, the Ministry of Industry and Information Technology formally announced the list of the third batch of companies that met the "Standards for the Steel Industry", which means that the steel industry will have about 15% of its production capacity facing elimination or upgrading.

However, it is worth mentioning that China is accelerating the construction of “One Belt and One Road” and will inject positive factors into the steel market; a large number of approved infrastructure projects such as railways and airport expansion have also released favorable signals, which will help boost market confidence while helping Digest the excess capacity of the steel industry.

In view of this, domestic steel companies should pay attention to market segmentation and differentiated marketing while actively exploring the international market, and avoid competitive pricing and vicious competition. The relevant departments should improve the outdated production capacity elimination mechanism, curb the disorderly expansion, promote the pace of transformation, upgrading and restructuring of steel enterprises, increase the vigilance and ability to deal with international trade barriers and trade frictions, and get out of the industry as soon as possible.