Buying Steel Tips From China
Buying Steel from China is not a easy work.As you know that China owns many steel mills. The capacity of production from China is at half of total capacity of world.This huge capacity make China export the large quantity of steel to all over world.
As the market joiners for the steel exporting business in the past ten years, let me write about the steel exporting chain in China enable to let you understand further how to buy steel from China and who you could prefer to buy.
China steel market is very particular business marketing. There are the following several joiners for exporting chain:
1) Steel Mill
2) Steel service center
3) Steel Traders
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A. Buying Steel From Steel Mill:
As all the people think, most of Chinese steel mill must own exporting dept. This thinking is right in HALF. About 8 years ago, most of mills did not have their own exporting dept. Or only 1-2 persons in the mills worked in exporting business. At that time, China steel exporting business mainly reply on steel service center and steel traders.
8 years ago, mill did not have following sectors for doing exporting business:
* Professional person
* Local business were extremely well (you know China realized the fastest development in the world from 2004-2012). Mill’s leader did not play high importance on exporting business.
* Fear for risk such as payment term, long time shipment, unfamiliar with international business rule,etc.
* No money to support sales for going abroad for visiting customers.
* No steel service center
8 years later, say now, all above sectors are fully establish. More and more foreign end-users choose to contact with mill directly.
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B. Buying Steel From Steel service center.
The business mode of steel service center: To be the agent of some mills and get the cargo from mills with 1 year contract. Meantime, mills give some discounting for the price. The service center supply Cutting/Slitting/Package service.About 10 years ago, Steel service center exporting a large quantity of steel due to they own the cargo resource. With the adding service, the steel service center could be lived. However, most of steel service centers’ main business is for the local steel end-users.With time comes now, steel service center for exporting business is very bad. The quotation offer is always higher than steel mill and big traders. Why?
The Answer is:
* High cost of capital.
(Mill could not consider the capital cost. To keep selling their products is first task)
(Big steel traders own cheap cost of capital, esp they own huge limit in Hongkong or Singapore for Back to Back LC, this payment mode is the cheapest way for doing international business).
However, there is a advantage for steel service centers:
* small quantity order. (mill and big traders love big quantity order. such as 3000 mt for one contract. However, some small buyer prefer to buy the small quantity in one time for decreasing the price risk and speed up their capital turnover.
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C. Buying Steel From Big traders
If you are regular buyer for HR coils, wire rod, rebar,etc in large quantity every month, I believe you must hear of the big trader.
They own big steel trading volume with their business mode. They are Chinese company, but they own many branches in the world. To service local buyers such as Vietnam,Korea, USA,etc. Meanwhile, they have low cost for their money. The running money cost is comparing to Hongkong or Singapore.
However, they do not like small quantity and the cargoes which are come from private mills. The big traders in the first consideration is for the risk. That’s why if you want to buy PPGI or Tinplate, it is difficult to buy from big traders.
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Above all, with my analysis, for the HRC/CRC/GI/Rebar/Wire rod, you could open the L/C to mills or big traders directly. If you worked with gobic industry, we could service you as middle for help you fulfill the contract finally. Our Chinese staffs know Chinese Mills and big traders very well and could help you communicate with them.
For the PPGI,tinplate, and other metal products such as tinplate can, gobic could receive your L/C directly and service you directly.
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