The trade industry is facing repeated pledges, and the industry hopes to get out of the crisis as soon as possible

At the first member conference of the Shanghai Steel Warehousing Integrity Alliance held on March 21, Zhu Junhong, President of Shanghai Steel Union E-commerce Co., Ltd. (hereinafter referred to as "Shanghai Steel Union"), criticized the current situation of the steel warehousing industry, stating that the domestic steel warehousing industry is facing a crisis of integrity, and repeated pledges have caused market order chaos. Governance is urgent.

Integrity - Pain Point of Steel Warehousing Industry

Last year, the national steel industry suffered an unprecedented blow, with steel prices "returning overnight to 18 years ago" and many small and medium-sized enterprises experiencing broken funding chains,

Trapped in serious losses, and as a part of the industrial chain, steel warehousing is also helpless. In order to obtain more loans, multiple repeated pledge behaviors have erupted in a concentrated manner. False pledges not only put pressure on the already sluggish steel market, but also dealt a heavy blow to commodity trading and financial markets.

It is reported that repeated pledge behavior can lead to situations where the loan amount exceeds the value of the pledged goods themselves, greatly increasing the possibility of lenders absconding with the funds, thereby bringing risks and even losses to the pledgee.

Roughly estimated, in Shanghai alone, there are 20-30 cases of steel pledge disputes being heard in court every month, involving not only small and medium-sized private enterprises but also several listed companies. Among them, China Steel Group Anhui Tianyuan Technology Co., Ltd. (referred to as "Zhonggang Tianyuan") is involved in repeated pledge of goods worth more than 20 million yuan, while Xiamen Xinda Co., Ltd. is involved in steel weighing a total of 26000 tons, with a value of about 80 million yuan.

According to the understanding, warehouse receipt pledge is an important way for steel trading enterprises to obtain financing from banks. However, in the process of pledging business, some enterprises often take risks by repeatedly pledging to hedge funds with banks in order to expand financing and obtain more loans.

In terms of emotions, this is a bad behavior that lacks integrity; in terms of reason, this violates the norms of market operation; in terms of law, repeated pledge is suspected of commercial fraud and violates relevant regulations of the Contract Law, and legal responsibility must be paid, "said an industry insider in the steel trade industry in an interview.

Wang Zhiguo, Chairman of Shanghai Xingsheng Steel Processing Co., Ltd., also stated at the press conference on the establishment of the Shanghai Steel Warehousing Integrity Alliance on March 21 that steel warehousing enterprises have encountered a comprehensive crisis of trust, which has had a significant negative impact on the entire industry. However, engaging in empty and false pledges will only lead to a dead end in the end.

Lack of trust leads to limited assistance

Credit is the soul of the market economy and an important foundation and symbol of modern civilization. The steel warehousing industry that breaks its promise will only fall into a vicious cycle, disrupting the normal operation and development of the entire market.

At present, the credibility of the entire steel trading industry has been affected by behaviors such as empty pledge and repeated pledge in the warehousing industry, causing unprecedented negative impact. Some companies even spare no expense to transport goods from their Shanghai warehouses to other places to avoid similar scandals affecting their surplus in the bank, but this has unnecessarily increased their operating costs.

In addition, the Shanghai Banking Regulatory Bureau has been issuing frequent warnings since 2011, stating that the repeated pledge of steel inventory in the steel trade industry is serious and carries hidden risks. At present, the credit provided by banks to steel trading enterprises has been greatly tightened, which is even more difficult for steel trading enterprises with huge capital demand. According to industry insiders, companies that previously obtained credit have also faced increased difficulties in renewing their loans.

Keeping promises is helpful, but breaking promises is not. The same applies to the steel warehousing industry. At the same time as the crisis of integrity broke out, it actually planted hidden dangers for oneself, but fortunately, more and more people have realized this and begun to make efforts for it.

Recently, the "Shanghai Steel Warehousing Integrity Alliance" jointly initiated by the Shanghai Federation of Industry and Commerce Steel Trade Chamber of Commerce Warehousing Professional Chamber of Commerce and Shanghai Steel Union has been established in Shanghai. The alliance is a self regulatory organization aimed at reshaping industry integrity and solving problems such as the mismatch between pledged data and reality.

The openness and transparency of information are the foundation of integrity, "said Zhu Junhong, President of Shanghai Steel Union. According to him, a total of 10 Shanghai steel storage enterprises have signed up to join the alliance, accounting for 36% of the total steel inventory in Shanghai. In addition, there are two other companies waiting to be signed and two potential companies.

Industry insiders have recognized the unpredictable negative impact of the integrity crisis on the warehousing industry and the entire steel market. "Some people have taken action, hoping to rectify the industry's atmosphere and optimize the market environment. Everyone also hopes that the phenomenon of repeated pledging in the steel warehousing industry can be contained and improved as soon as possible, re-establish the commercial reputation of enterprises, and enable the healthy development of the steel market