As North China is already in winter, large and mid scaled steel enterprises choose to go south. Comparatively, other small scaled steel mills choose to go hibernating.
According to analysis, logistics cost is the major factor causing such division.
Following the excessive production in North China’s steel market in the winter, products in north moving to south has become a normal solution.
Recently, moving steel material and products to the south is becoming more and more obvious. Take Hebei steel group for example, its internal personnel has told the reporter that about 60,000 tonne of steel products are transferred to the southern China’s market every month ever since the winter begins.
It is also obvious that price difference between the south and the north market also increased to abound CNY 400 per tonne. Therefore, once the products are transferred to the south China, the steel enterprise will make an extra profit of CNY 100.
However, small scaled steel mills, as they have a less market share in the south, will encounter more difficulties and cost if they also try to solve the shrinking demand problem in the north market in the winter. Therefore, they choose another alternative, which is hibernation---stop or reduce production to spend the cold winter.