The steel circulation industry has a broad prospect

Since 2016, with the advance of supply-side structural reform, the profitability of the steel industry has recovered significantly, the solvency of steel pipe suppliers has improved significantly, the deleveraging of the industry has achieved outstanding results, and the asset-liability ratio has significantly declined. As of October 2019, the asset-liability ratio of the steel industry was 62.01%, down 5.71 percentage points from the beginning of 2016, according to monitoring data from Lange steel research center. However, even so, the current iron and steel industry still faces the problem of difficult and expensive financing, especially for the main steel trading enterprises in the circulation link, the credit crisis since 2012 still has an impact, and the problem of difficult financing as small and medium-sized enterprises has always been difficult to solve.

Lange steel cloud business platform, according to data from the investigation of the iron and steel circulation industry PMI in November 1, 2019, in the country to vigorously improve the small and medium-sized enterprise financing environment, under the policy of steel circulation industry, financing environment index average is a 3.0% increase to 2018 average, at 44.1, but the index continued for many years in the status of the shrink range without any change, financing difficulties of China steel tube manufacturers are still serious. In the traditional financial model, Banks and other financial institutions directly lend to steel trading enterprises. After obtaining loans, steel trading enterprises obtain relevant steel products from steel production enterprises and then sell the products to downstream customers by the mode of credit sale and interest markup, which brings heavy financial pressure to steel trading enterprises.

At the same time, under the traditional financial model, Banks and other financial institutions give priority to some large steel trading enterprises and enterprises with strong profitability to issue loans. For small and medium-sized steel trading enterprises, the qualification requirements are higher, requiring the enterprises to bear greater risks alone, and the financing cycle is longer, which is not conducive to the improvement of financing efficiency. In recent years, with the development of supply chain of mild steel tube, the problems of financing difficulty and low capital flow rate of small and medium-sized steel trading enterprises have been alleviated to some extent. As a new financing mode to solve the problem of information asymmetry between Banks and small and medium-sized enterprises, supply chain finance has developed rapidly in China. In the second stage, the financial providers are transferred from commercial Banks to nodal enterprises or relevant non-bank institutions in the supply chain of square steel pipe, and the nodes are connected to each other to form a closer network relationship.