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Hebei private steel pipe industry experienced its worst capital chain

Latest news revealed that by the impact of financial pressures and shrinking of the market, private steel enterprises of Hebei some areas have stopped purchasing iron ore and other raw materials. The private steel enterprises in Jiangsu and Zhejiang provinces have stopped procured high-nickel-iron and other raw materials.
The end of October this year, Jianlong Steel Group and Minmetals International Trust Company had a trust initiated plans. Analysts pointed out that steel tube enterprises are generally raised money through internal financing and bank loans, etc. It is very rare through the trust channels to raise money, indicating that steel enterprises of capital is “hunger”.
Steel enterprises on the desire of funds are also evident from the issue of treasury bonds this year. WIND data, according to statistics, as of November 28 this year, steel enterprises raised 31.98 billion yuan through bond financing during the year. In addition to greatly increased scale steel enterprises bonds, the bond length are elongated, and interest rates increased. Before October 2010, steel enterprises interest rate bonds only have 3% -4%, but in December of that year, it has been rising bond interest rates to 6%.
Analysts pointed out that steel enterprises issue bond size have the explosive growth, which are related to the regulators to relax the approval procedures for issuing bonds, but more has a close relationship with steel tube enterprises in the capital chain tension. In addition, although the steel companies of the asset-liability ratio did not change significantly, but the company’s three quarterly reports showed clear that short-term borrowing this year, steel enterprises have a more significant growth. China Steel Association said recently the impact of interest rates by lending, corporate finance costs increased significantly. January to September medium-sized steel enterprises financial expenses had increased 34.13%.
Capital chain tension have a negative impact on the steel enterprises’ production and operation. Merchants Securities analyst ZhangShiBao consider that, by the real estate and other effects of slowdown in steel demand, steel enterprises continued to fall, forcing the insured should cut steel enterprises. He also said that though steel prices have stopped decreasing recently, have not synchronized with the falling prices of raw materials, including, including coking coal price, raw materials’ decline did not keep pace with the decrease in steel enterprises, which led to further compressed profit margins. Cut produce willing of steel enterprises will be further strengthened.
In step with the production decrease is part of the private steel enterprises have begun to stop procurement of raw materials. According to China Steel Group insiders, some private enterprises, in November, has stopped purchasing iron ore and other raw materials because of financial pressure. Insiders said Tangshan area steel companies have stopped purchasing iron ore raw materials. This is related to steel prices fell and cut produce, but also related to iron ore prices expected to fall on. He believes that next year will present oversupply of iron ore.
In other raw materials, news said, the Southeast stainless steel mills have reduced or even stopped purchasing high-nickel-iron. It is reported that Jiangsu a steel mill in September had 40% reduction in the chain of high-nickel-iron purchases. November has completely stopped purchasing high-nickel-iron. The same to a private steel mills in Zhejiang.
        “This year we msut tighten our belts.” a steel company said. Steel pipe industry began to emerge from recession in the third quarter, fourth quarter continued to decline. Market participants expect that in the “12th five years plan” period, the state regulation is not likely to relax, steel pipe industry will remain under pressure. 

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