SteelOrbis talked to Leo Ni from Fortune Link about the latest developments in the Chinese steel market.
Can you tell us about your company?
Fortune Link is part of a big China state-owned group, WZ Group. We have many subsidiaries and many of them already do business with Turkey. We mainly sell steel products to Turkey and other markets.
What are the major products you are selling?
Major products are steel products including wire rod, HRC (hot rolled coil) and billet. Before we sold GI (galvanized iron), but GI is difficult to sell here now. So, mainly our products to Turkey are wire rod, HRC and billet.
What are your main sales destinations?
Southeast Asia and actually almost all of the Asia region as well as South America and the Middle East. Those are our main markets because some markets like Europe have antidumping duties for all products, so we don't sell much there.
With Trump's tariffs and increasing global protectionism, what do you see as the major opportunities for Chinese exports? What impact do you expect from these duties on Chinese steel exports?
I think, as regards Trump's policy, we cannot predict what he will do later. Trump changes very fast - he fights for his country's interest, but sometimes he's flexible. So far, we cannot make decisions based on his policies. We try to ignore it because we think basically the US will still try to get more benefits for themselves, but they will not start a real trade war. Recently, they still made some deals with China and others.
In the short term, it affects demand - when trade tensions start, many overseas customers hold back new bookings and watch what happens. But in the medium or long term, we think it will not be a key factor for our business.
Last year brought difficulties for HRC exports from China because major buyers like Vietnam and South Korea imposed antidumping duties. What do you expect for future exports from China?
Yes, it's correct. South Korea and Vietnam have AD duties for China-origin HRC. Currently our company can still sell because of some special sizes. Definitely it will reduce a lot in the long term, but now other markets show increasing demand, especially the Middle East - mainly Dubai and Saudi Arabia. Those countries' demand is increasing, and other countries will also buy more from China.
Based on Chinese customs data, this year so far exports still increased. Later, if shipments to Vietnam and South Korea decrease and those to other countries increase, maybe it will become balanced. Some new markets may buy more. Of course, capacity is increasing everywhere globally, so it's hard to say if long-term exports will be affected. In the short term, at least this year, we do not foresee many changes in volumes.
In Chinese crude steel production, we saw a 0.4-0.5 percent increase in the first five months. Do you expect Chinese production to decline this year as requested by the government?
We think this year Chinese mills still have some profit, especially those who control their costs well. The government encourages reducing capacity, but, honestly, it's not easy for mills to obey those policies. Some mills have already started to lose money, so finally maybe the government or the market will try to reduce total capacity to some level. But, for this year, we feel it will still be balanced - just small changes, not very big reductions compared to last year.
If more mills start running with big losses, then maybe some will do more maintenance on production lines to reduce capacity utilization.
Can you share your company's export volumes?
Last year, our total export quantity was a little less than 2 million mt - this is only our company, not our group. This year, we hope to export more, trying to reach 3 million mt for exports. We keep increasing our exports year by year.
What are the drivers behind this increase? Which products or areas show growing opportunities?
First, we try to expand to more markets. In recent years, we have seen volumes to the Middle East increase very fast. A few years ago, Turkey imported a lot of HRC, but later Turkey also implemented antidumping and safeguards for wire rod and HRC. For HRC, we can now only sell to Turkey to customers who export.
We try to expand more to other markets. In Turkey, we also try to sell more wire rod and even billet. For billet, competition is very hard and every trader tries to provide very cheap prices. We provide better prices, and, since we're a state-owned company, once we sign contracts, we guarantee delivery.
We also try to expand more to the Middle East and Africa. We see demand from Africa also increasing this year.
Turkey still buys your products, so there are opportunities there?
Yes, in Turkey we have still been able to sell some products recently. That's why we come here - we want to do more business in Turkey.