In the first half of the year, the profit of the steel industry dropped by 21.8%

According to the financial data of industrial enterprises released by the National Bureau of Statistics on July 27, in the first half of 2019, the profit of iron and steel industry above the scale declined by 21.8% compared with the same period last year, mainly due to the rise of iron ore prices and other factors. In the first half of 2019, the profits of Industrial Enterprises above the national scale fell by 2.4% year on year, of which the first quarter fell by 3.3% and the second quarter by 1.9%, showing a narrowing trend. Zhu Hong, Senior Statistician of the Industrial Department of the National Bureau of Statistics, said that overall, industrial profits declined in the first half of the year, mainly due to the impact of a few industries, such as automobiles, petroleum processing and iron and steel.

Zhu Hong said that due to the sluggish market demand, the profits of automobile manufacturing industry fell by 24.9% in the first half of the year, while those of petroleum processing and iron and steel industry fell by 53.6% and 21.8% respectively due to the rising prices of crude oil and iron ore. The profits of Industrial Enterprises above the total scale affected by the above three industries decreased by 6.3 percentage points over the same period of last year.

Statistics Bureau data also show that in the first half of the year, new profits mainly come from building materials, power and electrical machinery industries. Among them, the profit of building materials industry increased 11.9% year on year.

It is known that since the resumption of construction in spring this year, the average daily output of steel enterprises has remained at a relatively high level, owing to the remarkable growth of national capital investment, the steady operation of the real estate industry and the steady increase of domestic steel demand. China Steel Association data show that since mid-April this year, the average daily output of crude steel in key steel enterprises has been maintained at more than 2 million tons. As of late June, the average daily output of crude steel in key steel enterprises was 202.67 million tons. However, due to factors such as the Valley mine disaster and the Australian hurricane, iron ore supply has been tight and prices have risen sharply this year. According to data released by the Ministry of Industry and Information Technology, by the end of June, China's iron ore price index was 398.32 points, up 67.4% year-on-year and 56.8% year-on-year. On June 28, the CIF price of 62% grade dry-base powder ore imported directly from iron ore was 110.79 US dollars per ton, up 71.1% year-on-year and 41.6 US dollars per ton, up 60.0% from the beginning of the year.

Iron ore price increase has become one of the core factors of performance reduction of many steel enterprises. At present, a number of iron and steel enterprises in advance reduction announcements also confirm this point. Anyang Iron and Steel said that because the steel market prices fell compared with the same period last year, and iron ore prices rose sharply, coal and scrap prices remained high, the company's profit level fell 72% to 78%. The Songshan announcement of Shaoguan Iron and Steel Co. also shows that the overall sales price of steel fell year on year. Influenced by the dam break in Brazil's Valley, iron ore prices rose sharply. The price of raw materials such as scrap steel and fuel was also higher than that of the same period last year. The company's profit level fell by 44.78% year on year.