Why steel electricity development so quickly

Capital market attention cause steel electricity “earthquake”

In 2014, steel mills, steel trading business under the condition of the pressure increase, have tried hydropower. Talk about the reason, some steel trade dealer said goodbye since a few years ago the iron and steel industry, since the “golden decade” to get into a long “winter”, steel trade business run out to be the trigger of the steel trade industry’s setback. However, in the process, along with the rapid development of the Internet age, with science and technology innovation and the electronic commerce mainly steel electricity buck the trend, steel mills, distributors, manufacturers, logistics channels dealers all opened a round of industry adjustment path from bottom to top, it also created one of electric steel business in the years of unprecedented prosperity.

At present, the Chinese iron and steel circulation industry is in a new round of change. Promote efficiency, strengthen service and reconstruction of trust, the realization of the three demands, all need with the aid of information technology means, is also for this reason, e-commerce platform to cuhk types in the iron and steel industry.

In this context, each capital into electric business platform in construction. In 2014, minmetals corp. ‘s e-commerce platform officially commercial xin yi lian, and shouted out the slogan of building steel field day cat platform; Shagang in nine long electricity, self-built logistics park not only, also won the high credit of bank for payment financing system. Capital markets for steel electricity an enormous attention, directly triggered the 2014 steel electricity “peaks”, rapid rise of big electric business platform to begin to enter a rapid expansion phase, used connections in the era of traditional iron and steel, resources, and a lot of capital, in exchange for a larger size, in order to occupy the advantage in the future competition.

The new way under the severe overcapacity

According to the latest data show that the current domestic steel production 800 million tons, capacity utilization is only 7 to eighty percent. Industry experts also said: “the steel industry is in the field of industrial efficiency with the lowest, average profit margin is only a few per cent zero.”

Relevant institutions, analysts said in the condition of continued weak market, crude steel output still maintain a high level of the country. Iron and steel industry, therefore, long-term accumulated contradictions are complex, is not “small profit lost YaChan, eliminate” so simple. Excess capacity will eventually reach a new equilibrium, it is a game for a long time process of market transition, the policy environment.

Since 2014, the steel market has kept prices trend. In the first half of the key statistics mills steel sales settlement price dropped to 3212 yuan/ton. 3000 yuan/ton for the industry is an important psychological level, because even the 2008 financial crisis, nor below 3000 yuan/ton. But in the middle of August this year, steel prices fell below 3000 yuan/ton mark all the way, today remain at 2700 yuan/ton, 2800 yuan/ton, down low and difficult to rise space. For steel prices remained low, the national bureau of statistics spokesman sheng laiyun said: “the iron and steel, coal and other commodity prices is a reflection of excess capacity contradictions, enterprises should actively adjust the structure, the transformation and upgrading.”

For this, including steel mills, most associated with iron and steel enterprises start hydropower, baosteel’s Oriental steel online, Shanghai iron and steel trading center, valin iron and steel’s Dutch stencil are online. By developing electric business platform, steel mills in to find new market to the excess capacity at the same time, also greatly reduces the enterprise’s own marketing costs.

Industry contradiction has the steel trade under the new play

An industry analysts believe that the development of the steel electricity with the steel market downturn and credit crisis frequent industry has much to do. The current steel market oversupply, and high product inventory, the sales channel is not smooth, result in high transaction costs, low profits, and then makes some companies into a vicious cycle of the credit crisis. In 2013, only Shanghai district court accepted the first trial on steel trade finance about 3700 cases of commercial disputes, an increase of about 5.5 times; Cognizance target amount to 23 billion yuan, accounting for last year 51.4% of the total amount of the financial commercial disputes mark, year-on-year growth of about 3.4 times.

In this case, the electronic commerce at a faster speed, lower transaction costs, more convenient way to trade to reduce the negative impact of traditional trade, and received extensive attention of many steel mills and traders.

In addition, earlier steel products from steel mills to end users, the need to the multi-layer agent distribution, per ton cost of intermediate agency fee is RMB 50 ~ 60 yuan. In the electricity, steel due to clinch a deal price transparency, transparency, terminal customers can be found in all kinds of platforms clinch a deal price is cheaper, distance closer, more convenient high-quality goods, has broken the traditional steel trade enterprises “eat post” circulation pattern. Thus, as an operating steel trade up to 14 years of steel trade, said: “the steel electric business platform to provide price transparency, logistics, capital, pay more convenient than traditional trading mode, the many advantages to make steel electricity development become inevitable.”

Of course, when it comes to the rapid development of the steel electricity, without the influence of the environment. The main sales channel is not only the traditional trade — traders appeared in 2012 and 2012, a wide range of failures. And, as a result of reverse industry supply and demand relations, from the seller’s market to buyer’s market, channel value highlights also makes the industry needs a new channel to replace the inherent pattern. Therefore, steel electricity was born in this environment is “inevitable”.

Electricity rapid development impact traditional traders

Electricity information transparency is not only influenced the traditional steel trade business “eat post” way of profit, also directly harm the part between the steel trade business with the manufacturer of special interest. For manufacturers, sales model, realize the online trading platform not only threaten the traditional distribution model on the pricing voice and “dealer orders must be prepaid” overlord mat endowment policy, price fluctuation will lose its downstream on the ability of production and inventory risk. Procurement for the terminal, online trading is not only convenient and quick, and the price is more transparent, any brand, model of daily lowest quotation of the steel can be clear at a glance, it broke the previous most enterprise procurement department “a price, the higher rebate” hidden rules.

Not only that, according to relevant industry insiders, in part as a third party trading platform of electricity from traditional traders, steel is for the purpose to “walk” to the price of the below price in network sales (even if it will bring their own enterprise loss). As a result, the traditional steel traders profit are low.

About electrical business, whether it’s steel class commodities of electricity, or articles for daily use of electricity, is a challenge to the entity shop. , but different from bulk production materials of everyday objects in its operation under the condition of good profit is higher than general life supplies. As a result, more and more steel electric ShangChengLi, also gradually influence and change the customer’s buying habits.

“Once electricity integration to a certain extent, the entity spot dealer inventory will enter the stage of differentiation, accurate, professional, or powerful electric chamber of commerce joint steel mills, owns a large inventory, comprehensive out existing traditional steel trade business. At present, the market is gradually toward the ‘destocking’ development, it for the traditional steel trade business is also a heavy challenge.” A steel trade, traders said.

Electricity still need to move forward

Steel electricity is only just beginning, still facing with resistance and various “bottleneck”. This resistance from the iron and steel this production itself characteristic, also has the resistance of the forces of the traditional marketing, but from the unfair competition in electricity industry as well as the disadvantages brought by the redundant construction and excess capacity, etc.

For example, some steel electric business volume to pursue and make Numbers, called hundreds customers, human matching, and “free” brand. But such a “free lunch” and for how long? According to industry insiders, the current steel electric business development though looks good, but in fact, the big electric business transaction is different from B2C (business to consumer marketing relationship between), it requires a lot of mat endowment and financial support, more dependent on cross-border cooperation. At present, the vast majority of steel electricity only as online trading platform to build, in the construction of logistics system is far from enough, very easily lead to trade links appear problem, affect the normal production.

Thus, as the Shanghai steel trade chamber of commerce, vice President of Ren Qingping puts it: “the third party platform needs combined with traders distribution services. Provide both the convenience of trading, also need to provide the steel exchange logistics distribution, that is to meet the whole process of online transactions. In fact, iron and steel integrated e-commerce with traditional traders, perfecting the trend of distribution channels, worthy of our attention.”

And logistics distribution not only including warehouse management, distribution of goods, personalized custom services include steel varieties, product quality monitoring, and the coordination in the process of production and delivery coordination, after-sales service, etc. Feasibility is difficult, because the general electrical business is difficult to implement. And electrical business through cooperation with ordinary traders, integrate the existing steel trade resources, would be mutually beneficial to both a try.

Steel, therefore, the electronic commerce not only involves the financial, logistics, warehousing, processing, distribution and so on all aspects of the steel supply chain, but also to the steel mills, traders and clients with customers, steel mills, traders with Banks and Banks, effective integration between logistics enterprise and customer, completes the online interaction. This not only is more difficult challenges for electricity, as well as industry the need to work together in the direction of the parties.