Today, Armco Metal
Holdings, a distributor of imported metal ores and a steel recycler in China,
announced its entrance into a steel supply agreement with Hong Kong-based
Midland Resources (China) Company Limited (Midland Resources). Midland
Resources serves as the exclusive agent for Shagang Steel Group for sale of its
steel products in Hong Kong markets.
Midland Resources
posting fulfillment of sales of over 400,000 tons of steel products for the
steel group in 2013. Shagang Steel Group is known as one of the largest
importers of steel scrap in China.
In the agreement,
Armco Metal Holdings will serve as a sourcing agent for Midland Resources for
Midland Resources’ importation of scrap steel into China. Midland Resources is
able to use its import licenses and financing capabilities for importation of
scrap steel for direct processing by Armco Metal Holdings.
With this processing
capability in place, Armco Metal Holdings is strongly positioned for
strengthened cash flow and expansion of its processing capabilities. Armco
Metal Holdings believes that the agreement is a solid first step toward it
becoming a processing base for both Midland Resources and Shagang Steel Group.
Commenting on the
agreement, Kexuan Yao, Chairman and CEO of Armco Metal Holdings, stated, “Steel
scrap is the only raw material in short supply in the steel industry, however,
the challenges faced by declining steel prices has placed a huge burden on the
whole industry supply chain. This situation has severely hampered our working
capital in second half of 2013 as we were faced with customer defaults and
declining inventory values. Our management team has reacted by implementing a
strategic plan to establish a ‘platform strategy’ to help stabilize margins and
achieve sustained profitability. Our profits, by nature, are mainly generated
from scrap processing fees at our plant and this agreement with Midland allows
for our new partner to manage much of the cash outlay for the importing and
transportation of the steel scrap so we can increase our throughput in a far
more profitable way.”
Yao continued, “We
believe that this importing partnership with Midland will be a win-win scenario
for both companies for years to come. Additionally, we are seeking
environmental regulatory approval to increase our importing license from 5,000
tons to 20,000 which we expect to receive in 2014. We see this as an important
move for future expansion when steel markets cyclically recover and our cash
flow improves.”
For more
information, visit www.armcometals.com
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