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China Gerui Advanced Materials Announces Increase in International Customers
04/26/2013 - China Gerui Advanced Materials Group says it has made steady progress in marketing internationally, with three customers placing regular commercial orders for its high-end and narrow-strip steel and three additional customers currently engaged in trials with the company's specialized products.
China Gerui Advanced Materials Group Limited, a high precision, cold-rolled steel producer in China, says it has made steady progress in marketing internationally, with three customers placing regular commercial orders for its high-end and narrow-strip steel. Since the international marketing initiatives began in June 2012, the company has captured three new customers: two in India and one in Turkey. Additionally, three potential customers in three other countries are currently engaged in trials with China Gerui's specialized steel products.
Two of the three initial customers began testing China Gerui's products before committing to becoming ongoing, regular customers. These three current customers are purchasing both wide- and narrow-strip high-precision, chromium-plated, cold-rolled strip steel. The initial application is for insulating wire and cable manufactured for the telecommunications industry with an average thickness of 0.15 mm and with widths ranging from 610–810 mm. Based on current order levels, it is estimated that the annual order requirements will total approximately 3,000 tons of this higher-margin product.
India and Turkey are both viewed as growth markets for steel. The World Steel Association indicated steel demand is expected to increase in India by 5.9% to 75.8 million tons in 2013 following 2.5% growth in 2012. Further, the Turkish Iron & Steel Producers Association (DCUD) stated steel consumption in Turkey is expected to rise 5.3% to 30 million tons in 2013 compared with 2012. The management of China Gerui believes its specialized, high-quality steel will meet limited competition and achieve a foothold in both markets.
"With a focus on balancing our business mix from the current heavy concentration in the Chinese market, and to build our presence in higher-growth markets, our strategic shift to enhance our exports is expected to broaden our customer base, strengthen our capacity utilization, and increase our return on investment to build value for our shareholders. We anticipate that exports will be the fastest growth driver of sales over the next few years with a long-term goal of exports potentially matching domestic sales levels over time," commented Mr. Mingwang Lu, chairman and chief executive officer of China Gerui. "Exports represent another opportunity to leverage our products' value-to-price ratio both in emerging and well-developed markets as we increase our customers' profitability and competitiveness. Emerging markets are ideal targets for China Gerui as they possess limited domestic production of high-precision, cold rolled products requiring imported products, and our high-quality, diversified product line offers more comprehensive solutions. On the other hand, well-developed markets present the opportunity to quickly take advantage of our lower cost and pricing structure to generate relatively larger orders and improve our customers' success."
Two potential customers, one in Thailand and one in Armenia, have placed orders to test the company's high precision, chromium-plated, cold-rolled strip steel for application in the local telecommunications industry. Another U.S.-based potential customer is intensively testing the company's products for application in the large food and beverage packaging industry, another higher-margin segment for China Gerui that could facilitate higher volume demand.
Sales terms to new export customers are consistent with the current domestic model whereby an initial cash deposit is pre-paid when an order is signed and the outstanding receivable is backed with a letter of credit upon product delivery.
Mr. Lu continued, "In addition, we have been adding new products such as laminated steel and chromium-plated steel, to our product portfolio to provide broader solutions to meet more of our customers' requirements and improve our competitiveness in both the domestic and foreign markets. We are also adding personnel and support resources to build our export marketing programs into a powerful brand building and sales tool. We believe these initiatives will enable China Gerui to evolve into a world-class, international metals processor committed to building shareholder value."
China Gerui Advanced Materials Group Limited is a niche and high value-added steel processing company in China. The company produces high-end, high-precision, ultra-thin, high-strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. China Gerui's products are not standardized commodity products. Instead, they are tailored to customers' requirements and subsequently incorporated into products manufactured for various applications. The company primarily sells its products to domestic Chinese customers with an emerging presence with international customers in a diverse range of industries, including the food and industrial packaging, construction and household decorations materials, electrical appliances, and telecommunications wires and cables.
