Profile Two: A witness to China’s steel market in 30 years

Posted on 04 March 2021

Writer’s remarks: 2021 is holding a personal significance to me, as this year is the 20th anniversary of me being a steel and metals industry journalist, the career that I have pursued with great passion and full of joy. To mark the special year, in the weeks to come I will interview a few in China’s steel industry who, just like me, have witnessed it evolve, for their own stories and their observations.

All the interviews are my way of paying respect for them and the many like them who have devoted years to the industry, quietly contributing in their own ways to its development and its future.

Here comes the second interviewee’s story -- by Hongmei Li from Mysteel Global.

(Pic at Huangshan or Yellow Mountain in Anhui, central China. Sunrise or sunshine? The view is just as spectacular, just like different life stages)

Mr. Z is probably one of the first contacts I made when I switched to ferrous and nonferrous industrial news from general news reporting in 2004 after migrating to Singapore. At that time, he had already spent ten years in a large-scale ferrous commodity trading house in China and he had just moved to the iron ore business sector.

Among my industry friends, he is one of the few whose working experience is deep and rich and is among those fortunate to have observed China’s steel industry from the perspectives of a trader, an institutional investor, a downstream industry participant and a supporter to the company’s core metallurgical trading and investment business by serving in a senior managerial role with his company’s workers’ union.

We have known each other for many years, and the most impressive to me about Mr. Z has been his absolute embrace of all the changes of roles he has been assigned to during his nearly 30 years in the metallurgical industry, and his enduring optimism and positive energy. He has relished all the posts and has never been shy in identifying something he feels is not quite right.

“I have served many roles – junior, medium-level, and senior – and in crucial departments and in supporting positions, but I have found fun in each and every of them. To me, there are no good or bad jobs, it is all about your perspective,” he said. I could sense his smile while chatting on the phone.

“To me, I have appreciated all the changes and valued all the opportunities, as they have challenged me from different ways, and in the end, I have gained industrial knowledge and management skills and have become a better me,” he said matter-of-factly.

I am sure that we have become friends because we have at least one thing in common: we are both quite honest in expressing our views, even though they may not fit in with mainstream thinking, and this was evident from the many anecdotes he shared during our more than one-hour discussion.

“I still remember that China’s steel industry had been in the fast lane after the country’s steel production surpassed the 100-million-tonnes-milestone in 1996. But looking back, that was such a small number because these days, even Baowu, as a single steel producer alone, can produce more than that,” he compared.

Being a trader in the booming steel industry and market economy was rather a novelty 20 years ago, he remarked. Those times were so different from today, in that traders were always accused of being steel-price manipulators, market speculators, and “accomplices” in pushing steel and iron ore prices higher.

“I felt we had been badly wronged, as it had nothing to do with us but market fundamentals, and I had to speak up, so when I presented at a steel conference in Beijing in 2003, I emphasized that it was meaningless to try appraising China’s steel and iron ore markets without acknowledging the reality,” he recalled.

The reality was “that Chinese steel capacity had been surging on the one hand, while on the other, iron ore supply had been – and remains – highly concentrated among the few suppliers. Of course, iron ore prices would have soared – that is simply the market economy,” he added.

He then laughed, remembering that he had attracted considerable media attention with his bold remarks.

“Can you imagine that back then, not many media in China had been paying much attention to steel or iron ore at all, but all of a sudden both had become hot topics?” he asked me. My imagination was running wild, preparing for all the amusing stories he was going to share.

He did not disappoint me. “After that conference, a local newspaper in Beijing interviewed me but she asked all the wrong questions about iron ore. You know normally how polite I am, but I just lost it after bearing it for a while. I asked the reporter straight out what hematite was, and she just looked at me with a total blank expression on her face, so I suggested she go back home to do some homework first!”

Ouch! That would have been rather mortifying for the journalist, and I feel so blessed that in my many years of reporting and interviewing, I have not been similarly embarrassed. 

Around 2010, he was promoted to oversee the company’s domestic iron ore mining operations and market intelligence collection, as well as exploring offshore iron ore investment opportunities. This role had given him first-hand experience on how the related associations and governing bodies in China had underestimated the country’s steel market potential and had thus, missed out on some golden opportunities to optimize the steel industry’s fundamentals such as investing in iron ore projects whenever the opportunities presented themselves.

“I still remember that back in 2002, the industry associations had estimated the China’s steel consumption would peak at 400 million tonnes! You can see how seriously far from the reality such projections were. With hindsight, this severe underestimation has cost the country dearly when we map out our raw materials development strategy,” he shared.

And back in the early 2000s, industry associations had also been advocating that the ratio of tubes, hot-rolled coils and strips in China’s total finished steel output be raised to 60%, viewing this as a showcase of the country’s steel industry advancement. “This had turned out to be a total misreading of China’s steel consumption model, which, even today, remains dominated by longs rather than by flats,” he added.

In the past couple of years, China has renewed its quest to develop and exploit iron ore resources in foreign countries, he observed. Strategically, such a mission may be important, but past lessons need to be learned to ensure that such attempts are not futile, he reminded all the potential investors.

“I used to be involved in scoping potential iron ore investments in countries such as Australia, and comparing then with now, I feel our Chinese investors are still rather project-based and fail to place a project in a bigger context,” he said.

Other than the rich ferrous content, “you need to evaluate the costs in infrastructure construction, the geographical location, potential costs in employee localization, timing, the market prospects, and whether a controlling shareholding is necessary,” he said, listing a few points he had found missing from project prospectuses he had observed, or aspects not given sufficient attention when he was involved in decision-making regarding potential investment opportunities.

“Your feet will tell you whether the shoes are the right ones, and that is so true when a country evolves its economy and industries. That’s when you need to analyse your own situation to be clear about what you really need,” he said.

For iron ore, the crucial fact to remember is that the reliance is mutual, he stated. Iron ore suppliers will need China to survive and prosper in the years to come, as for the foreseeable future there is no other countries that can consume as much iron ore as China, and with the concerns about the carbon emissions growing worldwide, iron ore may not be as popular in 10 or 20 years from now.

Towards the end of the interview, I touched upon the sensitive topic of retirement, hesitating because some prefer not to be reminded of their age. But he, being him, was rather at ease discussing this.

"At my present company, I will reach its retirement age in four years, but I think nowadays, most people my age elsewhere in the world would be considered still to be in their prime years, so if there are opportunities, I will prefer to stay in this industry as a lecturer or consultant,” he said happily in a voice full of anticipation for the future.

“I believe these will be the best means for me to share what I have experienced and the lessons I have learned. The industry may be evolving, but experience and lessons are timeless and are still valid for the others that are still endeavouring for their future in the metallurgical industry,” he elaborated.

The link to Profile One: a Beijing steel trouper for over two decades (

Source : Mysteel Global