The iron and steel industry suffers a big decline in profits and profits plummet 94.26% year-on-year

The bright sunshine could not dispel the overcast cloud that enveloped the steel industry. The steel industry is still struggling in the “deep waters”. China Steel Association’s insiders disclosed to the “Economic Information Daily” reporter on the 1st that key large and medium-sized iron and steel companies realized sales revenue of 310.158 billion yuan in May, a decrease of 2.05% from the previous month; realized profits and taxes of 7.412 billion yuan, a decrease of 17.16% from the previous period; and profits of only 14.03. Billion yuan, a month-on-year decrease of 388 million yuan, a decrease of 21.66%. It is worth noting that the loss-making enterprises in the month of May accounted for 2.139 billion yuan, a loss of 8.8% from the previous quarter, and the loss reached 31.25%.

This is because after the negative profits of steel in early January, the steel industry has been operating for five consecutive months. According to the statistics obtained by the reporter from the China Steel Association, from January to May, large and medium-sized steel companies realized a total sales income of 1,491.542 billion yuan, a year-on-year decrease of 1.6%; and profits and taxes of 32.715 billion yuan, a year-on-year decrease of 58.47%. It is worth mentioning that from January to May, large and medium-sized steel companies realized profits of only 2.533 billion yuan, a year-on-year decrease of 41.56 billion yuan, a decrease of 94.26%; loss-making enterprises a loss of 11.749 billion yuan, an increase of 27.38 times the same period last year, only 414 million yuan The loss reached 32.5%.

A person in charge of the China Iron and Steel Association told the reporter on the phone that on the one hand, the price of steel products has fallen sharply, and on the other hand, the cost has risen sharply. “One drop in one liter” has squeezed the slim profit margin in the steel industry. As a result, the economic efficiency of the iron and steel industry has further declined, coupled with the multiple factors of sluggish demand from the downstream industries and excess production capacity in the domestic industry, most of the iron and steel enterprises’ gross margins have been losing money.

The reporter learned that steel stocks have become the main force of the stock market "breaking the net." Up to now, there are more than 10 stocks with a net book rate of less than 1 in the steel sector. Anyang Iron and Steel, Angang Steel, Valin Steel, Baosteel and Wuhan Iron & Steel are among the listed companies. Among them, the net rate of Anyang Steel is the lowest, less than 0.6 times.

The above-mentioned person in charge told the reporter that since the beginning of this year, due to the global macroeconomic environment, both domestic and international steel demand have been in a weak state. In particular, the real estate control policies and the investment growth of new infrastructure projects such as railways have dropped, plus the use of automobiles and shipbuilding. Demand for downstream steel for manufacturing, machinery, appliances, and light industry continued to slump, leading to a drop in steel prices.

However, on the other hand, the price of raw materials mainly based on iron ore is "easy to rise and fall," and remains high. A large domestic steel company executive stated frankly to reporters that in the first three quarters of 2011, the price of bulk raw materials for steel upstream rose sharply. After entering the fourth quarter, steel prices fell sharply, driving the fall in iron ore prices, but the price of iron ore fell back. Obviously less than the decline in steel prices, more worrying is that as long as steel prices have rebounded, iron ore prices will soon follow the rise, and the increase is even greater.

“The three major mines are still in a monopoly position in resources, domestic demand for crude steel production is also relatively strong, and iron ore prices are unlikely to fall sharply.” said the above high-level, in addition, coal prices have also been high, from January to April coking Coal prices rose by 0.6% year-on-year, and coal injection prices rose by 4.37% year-on-year. According to monitoring by the Iron and Steel Association, the price of iron ore imported by CIOPI rose from the lowest of US$128.4/ton last year to US$152.9/ton in mid-May, and it has increased by US$24.5/ton.

The reporter learned from the steel mill that due to the continued weakness in the market, steel companies and user funds are in a tight state, and there is a great difficulty in repaying sales of goods. In particular, the cash ratio of cash withdrawals is low, and steel companies are generally facing financial constraints. status. On the other hand, a considerable part of the steel companies have already reached the “unable to use” status for bank funds. A deputy chief of a steel plant in Hebei told the “Economic Information Daily” reporter that the current one-year bank benchmark interest rate has risen to 6.56%, while the average profit rate of the steel industry was only 2.42% last year, and the profit rate from January to May was only 0.17%. . Steel Association statistics show that from January to May, the financial expenses of large and medium-sized steel companies rose by 37.07% year-on-year, and a total of 33.6 billion yuan in financial expenses were paid.

Not only that, the steel industry is still faced with the problem of “overcapacity and low industrial concentration”. According to the preliminary statistics of China Iron and Steel Association, there are currently 500 enterprises that have steel production capacity in China, more than 700 enterprises that have iron production capacity, 3,000 to 4,000 steel rolling enterprises, and crude steel production capacity that has reached 900 million tons, while local small and medium enterprises have The output of enterprises is still growing substantially. According to the statistics of the Iron and Steel Association, from January to May, the output of crude steel of the member companies of the iron and steel associations fell by 0.6%, but the non-members’ production of crude steel increased by a large margin of 18.5%, and the production pressure brought about by disorderly competition was very high.

“The high cost and low efficiency of the industry will be difficult to reverse in the short term.” Xu Xiangchun, my steel network consulting director, said in an interview with the “Economic Information Daily” reporter that due to the weak demand and the sharp drop in steel prices, some companies have adopted overhauls and reduced production. Other measures have eased the release rate of steel production capacity, but the level of daily production is still at a high level. The competition brought by high output also makes it difficult for steel prices to increase substantially. It is expected that the steel market will continue to be in a situation of oversupply in the later period and prices will remain low. fluctuation.


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