E-commerce can become the saviour of the steel industry overcapacity forced transformation

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E-commerce can save operating costs, development costs and logistics costs for the steel industry to solve a package of problems. But at the same time, we need to see, on the one hand, the decline in profits, funds are getting tighter, on the other hand, the development of e-commerce requires sustained capital investment, which makes the development of late steel e-commerce is facing a lot of uncertainty.   

Industry predicament forced the transformation of the steel industry bets on e-commerce, the pressure of overcapacity, all the time in the erosion of the profits of the entire steel industry chain. Transformation has become an urgent task for the steel industry, and in this context, steel e-commerce mode has become a new attempt.   

Since the financial crisis in 2008, domestic steel demand has shrunk significantly, and the problem of overcapacity in the entire steel industry has become increasingly serious. At this stage, both upstream steel mills, midstream traders and downstream end-users are facing unprecedented business difficulties.   

Transformation and upgrading has become a problem that most steel mills have to rethink, but where to turn, and how to turn, has been plagued by steel enterprises. The rapid development of e-commerce undoubtedly provides a lesson for the transformation of the steel industry.   

"The e-commerce platform is able to reintegrate the information, logistics and capital flows, integrating many sellers with a huge pool of buyers, which is a good platform for the steel industry." Hu Xiaochun, secretary of Shanghai Steel Union<, said in an interview with Futures Daily.   

Li Xinchuang, president of the Metallurgical Industry Planning and Research Institute and executive deputy secretary-general of the China Iron and Steel Industry Association, said that as the superiority of the e-commerce model is gradually recognised by the market, it will be gradually promoted in the steel industry in the future.   

Recently, Shagang announced that it will contribute 4.8 million yuan to JiuLong electric company to increase its shareholding, marking its formal entry into the e-commerce platform, which is following the leading steel enterprises such as HISCO, Baosteel and other steel giants to test the waters of e-commerce. Domestic steel e-commerce "spring" has quietly arrived.   

Shanghai Steel Silver E-commerce Co., Ltd. general manager Bai Rui recently said at a meeting, the entire steel industry environment has changed, that is, from the original production, circulation are not worried about selling, to the production is not worried about selling, circulation gradually differentiation, and then to the production, circulation are worried about selling, which provides a favourable environment for the development of steel e-commerce.   

In Bai Rui's view, the future of competitive enterprises, inevitably with high efficiency, low-cost transactions and effective risk hedging tools, e-commerce can save operating costs, development costs, logistics costs, to solve the problem of the enterprise package.   

It is because of the high efficiency, low cost and many other advantages, steel e-commerce model is increasingly recognised and accepted by the entire steel industry chain. In fact, in addition to steel production enterprises, intermediate traders and third-party platforms are also actively seizing the e-commerce market, steel e-commerce competition has entered a white-hot stage.   

Steel e-commerce is the inevitable trend of the future development of the steel industry, which has become the consensus of the industry, and it brings opportunities for the development of the steel industry at the same time, perhaps more of the challenges to be faced.   

At the beginning of this year, the Ministry of Industry and Information Technology, Deputy Director of the Information Technology Promotion Department, Dong Baoqing has revealed that the Ministry of Industry and Information Technology to track the steel e-commerce platform service providers have more than 30, steel e-commerce is expected this year, will enter the "warring states" period.   

Li Xinchuang said, in the domestic steel e-commerce model, it is difficult to determine which model is optimal. However, in the view of industry insiders, the traditional steel enterprises to do e-commerce there are inherent shortcomings in its business philosophy and technical skills and other aspects are lacking.   

In addition, Wang Zhongyuan, a steel researcher at Xiben New Main Line, believes that steel production enterprises to do e-commerce, itself also involves the issue of fairness. He also believes that the current environment has prompted the entire steel industry chain to flock to do e-commerce, but the development of this model to a certain extent, will inevitably also go through a round of survival of the fittest.