Domestic iron and steel enterprises once made a lot of money last year. This year, with high prices of raw materials such as iron ore and coke, their profits have been seriously eroded, and the overall profit level has declined by a third compared with the same period last year.
According to the data released by China Iron and Steel Industry Association recently, from January to September, the national crude steel output was 748 million tons, with a year-on-year growth of 8.4%; pig iron output was 612 million tons, with a year-on-year growth of 6.3%; steel output (including repetitive materials) was 909 million tons, with a year-on-year growth of 10.6%. But in terms of steel price, from January to September, the composite index of China's steel price index (CSPI) averaged 108.58 points, down 7.17 points or 6.2% year-on-year. Among them, the average value of long material index is 114.61 points, down 5.0% year on year, and that of plate index is 104.81 points, down 7.5% year on year. In this case, the benefit of enterprises is obviously reduced. From January to September, the sales revenue of member enterprises was 3.18 trillion yuan, up 11.6% year-on-year; the total profit was 146.6 billion yuan, down 32% year-on-year; the sales profit rate was 4.6%, down 3% year-on-year. Recently, listed companies in the domestic steel industry have issued three quarterly reports which are not optimistic.
Yulong Co., Ltd., which specializes in the research, development, production and sales of welded steel pipes, changed its performance from profit to loss in the first three quarters of 2019. During the period, the company realized an operating revenue of 258 million yuan, a year-on-year decrease of 78.42%; the net profit attributable to shareholders of the listed company was - 12.707 million yuan, and the net profit of the same period of last year was 86829000 yuan. The company said that the operating revenue of the period was lower than that of the same period of last year, mainly due to the decrease in the sales scale of steel pipe business in the current period. In the first three quarters of 2019, Shandong Iron and steel achieved an operating revenue of 52.98 billion yuan, an increase of 30.66% year-on-year, but the net profit was 490 million yuan, a decrease of 79.76% year-on-year. The company said it expected the accumulated net profit at the end of the next reporting period to be significantly reduced compared with the same period of the previous year due to the substantial increase in the price of raw materials and fuels and the adjustment of depreciation of new and old kinetic energy conversion assets.
According to the Research Report of Zhongtai securities, although the downstream demand of iron and steel is stable under the strong pull of real estate this year, the supply side of the industry continues to increase due to factors such as the relaxation of environmental protection production restriction, the production of replacement capacity, etc., and the industry profits between the advance and retreat fall sharply. From the perspective of the recently disclosed performance of listed steel enterprises, the net profit of most companies in the first three quarters fell by 40% - 75% year on year. In 2018, domestic steel enterprises once ushered in a good day with a profit of more than 1000 yuan per ton of steel. But now, due to the erosion of raw material cost, the enterprises have entered the edge of loss. "This year's performance of steel enterprises has dropped dramatically, mainly due to supply side factors." Zeng Jiesheng, an analyst with eurometallurgical cloud business, pointed out in an interview with the securities times · e company that, first, the raw material cost of the steel plant has increased a lot, the price of iron ore is about 15 dollars higher than that of the same period last year, and second, the output of the steel plant has increased too fast, the output of crude steel from January to September was 747.82 million tons, an increase of 8.4% year on year.
The increase of supply has caused great pressure on supply, and the price of steel has dropped about 10% - 20% compared with the same period last year. The statistical data of China Steel Association also shows that since this year, the prices of domestic iron concentrate, imported iron ore, scrap steel, coking coal and other main raw materials have generally increased and continue to run at a high level. From January to September, compared with the same period last year, the purchase cost of main raw materials increased by 31.7% for imported iron ore, 21.5% for domestic iron concentrate and 8.8% for scrap. Since this year, affected by the dam break of Vale mine in Brazil and the hurricane in Australian port, the price of imported iron ore has risen sharply, from 69.03 US dollars / ton at the beginning of the year to 119.51 US dollars / ton in July. In addition to the rising price of scrap steel and coking coal, as well as the rising cost of environmental protection and logistics, the cost of iron and steel enterprises has risen by a large margin, with the manufacturing cost rising by 8% ~ 10%, resulting in the efficiency of most enterprises Profit decreased year on year.
Cheng Xiaoyong, director of Baocheng futures financial research institute, also told reporters that this year's profit in the iron and steel industry has declined, mainly due to the rising cost. In the first three quarters of this year, iron ore and coke prices were mostly at high levels, eroding the profits of steel enterprises. In terms of downstream demand, screw steel is mostly used in the field of real estate, and hot-rolled coil plate is mostly used in automobile manufacturing. From the perspective of market, the demand is not too bad, but not too good, and the overall trend is stable. However, the cost problem caused by the decline of steel enterprise performance is being alleviated. On November 4, the black series continued to lead the decline again in the domestic futures market. By the end of the afternoon, the main coking coal contract fell 0.95% in 2001, and the main iron ore contract fell 1.20% in 2001. After reaching a new high in the middle of July this year for nearly five years, domestic iron ore futures prices have shown a downward trend. The main iron ore contracts closed at 615 yuan / ton on Thursday, down about 25% from the previous high of 816.5 yuan / ton, while the biggest decline in the period was more than 30%.
According to the relevant policy documents released recently, the situation of production restriction of steel enterprises this winter may be more severe than last year. Although it remains to be seen whether the specific implementation will be relaxed, the futures prices of raw materials such as coking coal have declined in the near future due to the expected weakening demand. " According to Cheng Xiaoyong, from this logic, in the later stage, if the steel price increase is mainly driven by demand, the price of coke and iron ore may have room to increase, but if the steel price increase is mainly driven by winter production restriction, it will be adverse to the price trend of raw materials. At present, judging from the limited production, the market may be divided.
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