Shougang's exports suffer the effect of SARS outbreak
China's one of the major steel mills Shougang is experiencing the adverse impact of the SARS outbreak on its steel exports. Since the month of March the company is having difficulties to load and deliver its products on a regular basis with many ships that refuse to berth at the infected sites in
China.
This situation is putting the company under pressure as the inventory levels at the port sites are increasing, waiting to be exported. According to recent reports, the inventories are currently 20'000 tons higher than end of last year.
With certain companies cutting back or stopping imports from
China one after another, the situation got even worse. The
freight rates also hiked from $22/ton to $40/ton levels in close relation to the unwillingness of the ship owners to load material from Chinese ports. As a result, Shougang's attempts to sell 20'000 tons to
Italy in April ended in failure, holding costs and inventor levels increasing, and the company even got to the point where the sales price of its material on CIF basis remained well below its actual FOB value of material. The company expects export prices to continue sliding in May and June.
Shougang is now looking for solutions to export its products to alternative destinations in
Southeast Asia, in order to compensate the negative effect of the problems it has been suffering.