[Industry observation] The break in capital chain of steel trade enterprises is a case that should be careful about business diversification

In recent days, there have been frequent news that capital has been broken and veterans have ran off the road, and there has been similar rumors in the steel trade industry that has a large demand for funds. In this regard, Zhu Junhong, president of Shanghai Iron and Steel Electronic Commerce Co., Ltd. (300226.SZ), said in an interview with reporters on November 22 that the capital chain breaks that currently occur in the steel trade industry are not widespread and are only cases.

Yu Huabin, president of the People's Bank of China Metallurgical Finance Division, also told reporters that the phenomenon of running is a reflection of the de-foaming of the real estate industry at a deep level. The huge profits of the real estate industry in these years have led to real estate dreams in all walks of life. The steel trade industry is no exception. Some companies use steel trade as a platform, they switch from real estate projects to real estate projects, and even individual companies use false ones. The stocks and warehouse receipts were deceived from banks.

However, unprecedented real estate control policies this year, together with bank credit funds are also very tight, and some steel trading companies with “real estate dreams” are prone to liquidity problems, and even the capital chain breaks.

However, Yu Huabin also pointed out that according to the understanding of the People's Bank of China, only a few companies have experienced the problem of capital chain breaks. At the current stage, the risks of small and medium-sized steel trade enterprises are controllable. As the bank, Minsheng Bank will further improve the methods of classified development and management, strengthen business model innovation, and continue to support customers who are truly stable and healthy. “We do not think that the financing of small and medium-sized steel trading companies will be difficult to prevent and control. We will continue to strongly support small and medium-sized steel trading companies in the future.”

As for how to solve the problem of financing difficulties for SMEs, Yu Huabin suggested that we should lower the threshold for financial access, establish more private financial institutions and small and medium-sized financial institutions, and at the same time promote the marketization of interest rates. “The current level of interest rates does not truly reflect the equilibrium price of funds. The dual-track system of capital prices has emerged in different types of enterprises. The distortion of the price signals has caused some of the strong big companies to take up too many sources of gold. Therefore, It is necessary to gradually promote the marketization of interest rates so that financial institutions can squeeze out more funds for SMEs."

Since the steel market has been at a meager profit, some steel traders have already been involved in real estate, mining, and private loans and other unfamiliar areas while selling steel products. To this, Yu Huabin pointed out to reporters that in order to change the mode of trade, the profits are meager. The situation, steel trading companies have begun to transition, this is the general trend.

However, Yu Huabin emphasized that steel trading companies must also increase their awareness of risk prevention, and must stay away from speculative transactions, release risks, and other extremely high-risk issues. Cross-industry investments such as guarantee companies and real estate must also be extremely prudent.

Yu Huabin believes that a very good direction for the transformation of steel traders is to transform from a traditional single trader to an integrated supply chain service provider and provide logistics, warehousing, cutting, processing, distribution, etc. for users on the supply chain. More value-added services, as an integrated supply chain service provider. "Comparatively, steel trading companies have certain advantages in resources and channels, and it is easier to upgrade services."

Zhu Junhong also believes that the steel trade enterprises have not yet reached the point of cross-industry transition. Enterprises should adjust their own strategies according to the environment, but they cannot adjust their business direction freely. For the steel trade enterprises, the big environment is not good. Other industries are also at great risk. Companies should base themselves on steel trade and strengthen services.