Why did the dealers lose money when the steel price soared?
In early May, 16 domestic steel mills intensively increased prices, and rebar rose by 50-100 yuan per ton. On May 18, in the construction steel market, rebar prices in mainstream cities were quoted at 4140 yuan/ton. Compared with the sluggish prices before 2016, the price of rebar has increased by more than 100%. "The price of steel has risen so much in the past two years!" Many people seem to have made a fortune in the steel trade, but the "steel boss" complained: the price of steel is too high, and the capital is not enough...
Steel mills limit production capacity, and some steel products need to increase prices
Recently, the price of steel has risen sharply. Have the "steel bosses" who sell steel made a fortune? Recently, a reporter from the Qilu Evening News came to the Taishan Steel Market in Manzhuang Town, Daiyue District, Tai'an City. Due to its wide range of types and models, it is called the largest steel trading center in Jiangbei by the industry.
Compared with the previous two years, the most obvious difference here is that the amount of steel stacked has increased significantly. In some larger companies, the angle steel, H-shaped steel, channel steel and other steel materials in the yard are neatly arranged, and some models have steel yards as high as two people. In some relatively small companies, steel is piled up full, leaving only the passage of a truck in the middle.
Outside the compound of an economic and trade company, large trucks came to load in a long line, and all the gantry cranes in the compound were running at full capacity. A truck with a Hebei license plate was loading, and the driver said that it would come before dawn: "Small steel mills are closed, and many large steel companies also limit their production capacity. Therefore, some types of steel products on the market are available from a few large distributors. I have to wait in line because I can’t buy them elsewhere. Now is the peak of the construction site. The customer is in a hurry, and the boss is also in a hurry. A call will be made soon."
The boss he referred to was a distributor engaged in the steel trade, and most people in the industry jokingly called the "steel boss". Cao Gang, who started his business in the steel market, is a "post-80s" and "steel boss". He is worrying about the supply of goods these days. There are major customers who want a batch of manganese plates in stock. The price in Taian is 4580 yuan/ton. However, due to the limited production capacity of steel companies, this steel is currently in short supply on the market. Some large stockholders require an increase of 200 yuan per ton before they can be offered. the arrival. "Starting to increase the price from the factory, the steel mill has to add 100 yuan per ton, and the price rises, and the customer's purchase volume declines. If you can't find a cheap source, the customer may not be able to keep it."
Steel price rises, dealers are under pressure on funds
Since working in the steel trading industry, Cao Gang has started to pay attention to any news that may affect the price of steel. Environmental protection production restrictions and construction site operating rates have become keywords that touch his nerves. After the "May 1st" holiday this year, market demand continued to grow, and steel futures and spot market prices continued to rise.
There are several large companies in the steel market, which stock up to 20,000 to 30,000 tons for many years. If you simply calculate the price from the price increase, they can make two to three million for every 100 yuan increase in steel. However, the actual situation is that the spot market is not like futures. It is easy to sell when the price rises, but it is difficult to sell when the price falls. Most steel traders dare not venture into it.
In April this year, an industry survey released by the Southwest Iron and Steel Index mentioned: “Although the market was good in the past two years, not many people made big money. It’s too transparent. You can make 400 yuan if you rise one thousand, and you may lose 900 yuan if you fall one thousand. Before 2017, steel companies had such high profits, but there were many dealers who could lose money."
Cao Gang’s company is one of many small steel traders. Since most of the time he can only get the remaining small orders from the steel mills, he describes the business as "survive in the cracks." He said: “Since the second half of 2016, the price of steel has increased. The price rebounded too fast. When the rebar was at its lowest, it fell to less than 2,000 yuan per ton, and now it is more than four thousand one ton. I feel that the price of steel has risen. We will make a lot of money. In fact, the more we go up, the more we are afraid. We are always buying and selling without hoarding the goods. I am afraid that one day the price of the goods will drop and the money will be broken if the goods are in our hands."
“In 2015, steel prices were sluggish, and the average price of a catty of rebar was just over 1 yuan, but at that time dealers’ profits were also higher than they are now. The most important thing is that the rise in steel prices will greatly increase our financial pressure. For 10,000 tons of goods, we have to advance 20 million to the steel mill or large distributors, and now we have to advance 40 million.” Cao Gang said.
The increase in steel prices is mainly due to the profitability of steel mills. At the end of April, the average tax-included cost of rebar was 3268 yuan/ton, an increase of 41 yuan/ton month-on-month, an increase of 1.3%, and a profit of 608 yuan/ton. And many steel traders who do not stock up, rely on handing over the stock from steel mills or large distributors, with a profit of only about 50 yuan per ton.
Rely on information for a living and profit by personalized processing
When interviewing a steel trading company, the reporter found that several large trucks were all bearing the license plate of the same province. Out of curiosity, he asked the driver where the goods were sent. Unexpectedly, this sentence has violated the industry taboo. The shipper of the steel trade company shouted: "What are you asking for? Do I have to get the invoice to let you understand? I told you all, grab us What about customers?"
Later, in an interview with Cao Gang, he raised the matter and said with a smile: "The steel trade is essentially an industry derived from the asymmetry of information between buyers and sellers. So information is extremely valuable, and the question you asked hit the door of other companies' lives. "
At the entrance of the steel market, there is a giant billboard that says "On the XX website when you find steel." In the past few years, various B2B e-commerce platforms have sprung up online. In the steel industry alone, there were about 300 at its peak. Most of these platforms use information released by buyers and sellers to match business for free. When they first appeared, many "steel bosses" were also worried about being robbed of their business. However, after a few years, everyone found that the current impact was not great.
Cao Gang explained: “There are so many types and models of steel. This industry is very complicated. It is not a matter of simply placing an order from the Internet and sitting at the door of the house waiting to receive the goods. For example, my client wants a batch of medium and heavy plates. , Will put forward requirements for size, shape, etc. In addition to on-demand processing, I have many follow-up services. I can only say that the Internet platform provides some convenient help for this industry, but it is absolutely impossible to subvert."
He pointed to several processing companies outside the window and said that in the past few years, they were mainly selling primary steel, and now they are all equipped with cutting equipment to perform customized processing according to customer needs. Their company also intends to transform in this regard, in addition to standing inventory, customers will only purchase customized products when they want them.
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