Shan Shanghua said that the Chinese steel market lacks a unified sales network. On the one hand, there are too many steel mills, and there are thousands of steel mills in the country. The production capacity is too scattered. When steel prices rise, steel mills compete to increase prices; when steel prices fall, everyone competes to cut prices.
On the other hand, China has more than 100,000 intermediaries engaged in the sale of steel products, but there are no middlemen who can influence the market. When the market fluctuates, the middlemen tend to follow the trend, not only failing to stabilize the market, but also increasing market volatility.
Shan Shanghua said, however, in recent years, leading steel companies such as Baosteel and Anshan Iron and Steel have begun to establish new steel marketing models and produce on demand, thereby improving their ability to adapt to the market.
Shan Shanghua believes that the recent rise in domestic steel prices has a certain relationship with the middlemen’s stocks. When the market is bullish, middlemen begin to sell goods. If each broker trades 100 tons, a total of more than 100,000 brokers will be able to save more than 10 million tons; if 1,000 tons each, the total is more than 100 million tons. A large number of shipments have distorted market demand to some extent and increased the risk of market fluctuations.
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