In the early 2000s, the steel trade market in China experienced a dramatic transformation, largely fueled by the involvement of banks and the entrepreneurial spirit of individuals from Zhouning County in Fujian Province. As early as the late 1990s, local entrepreneurs began to venture into Shanghai's steel trade, gradually forming one of the most influential groups in the industry. This group, often referred to as "One Belt One, One Gang One," laid the foundation for what would become a booming sector.
With the easing of macroeconomic policies after 2001, the steel trade entered a period of rapid expansion. More and more people from Zhouning and neighboring areas flooded into the industry, turning it from a small-scale operation into a structured and large-scale business. Banks, initially cautious, soon became key players, offering high-interest loans that allowed traders to scale their operations quickly. At one point, interest rates soared as high as 40%, creating an environment where even those without significant capital could enter the market.
Zhou Ning’s steel traders were seen as pioneers during this time. Zhu Junhong, a well-known figure in the Shanghai steel market, once remarked, “This was an era when pigs could fly.†The belief was that if you had the courage to buy goods, you could always make a profit. The industry grew rapidly, with steel production increasing at a sharp angle between 2001 and 2010. During this time, the average profit per ton of steel reached between 300 to 500 yuan, creating a massive market worth hundreds of billions of yuan.
The peak years brought immense wealth to many. In 2009, following the global financial crisis, the Chinese government introduced a 4 trillion yuan stimulus package, which further boosted the steel trade. Banks relaxed their lending standards, and steel traders found themselves in a "honeymoon period" with financial institutions. Loans increased dramatically, with some traders securing up to 100 million yuan. The perception of Zhouning traders as reliable borrowers led to easy access to credit, with some even able to secure 1.5 million yuan for a 1 million yuan house.
However, this golden age came to an end as steel prices fell sharply in 2012. By September of that year, the price of rebar had dropped from 5,300 yuan per ton to 3,300 yuan. This decline triggered a chain reaction, leading to the collapse of many steel trading companies. The Ministry of Industry and Information Technology reported that the sales profit of 80 major steel companies fell by 98.2% year-on-year, pushing the industry into a deep crisis.
Banks, once eager to lend, began to tighten their credit policies. Many steel traders found themselves trapped in debt, with no way to repay their loans. Litigation became common, with over 300 cases reported in Shanghai alone within a single month. The once-bustling steel trade hub, known for its luxury cars and bustling markets, now stands quiet. Some former traders have disappeared, while others are struggling to recover from their financial losses.
The Shanghai Steel Exchange Building, once a symbol of the industry's success, now stands as a reminder of the past. Its developer, Zhou Huarui, who once boasted that every bank had a branch in the area, now sees his dream fade away. Many of the traders who once thrived there are either gone or hiding, and the once-thriving district is now a shadow of its former self.
Despite the collapse, some banks still try to recover their loans, sending teams to track down hidden assets in the hometowns of former traders. The once-lucrative steel trade has turned into a cautionary tale, showing how quickly fortunes can change in a volatile market. For many, the era of easy money is over, and the lessons learned from this boom and bust will linger for years to come.
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