“As a result of market demand, steel companies began to cut production or arrange maintenance, and the level of daily production of crude steel decreased significantly after entering the month of October. Overall, from the second half of the year, the output of crude steel production has declined year-on-year.†At the fourth industry information conference of the China Iron and Steel Association, Zhang Changfu, vice chairman and secretary general of the Steel Association, said.
Slow growth rate of sheet products According to data from the National Bureau of Statistics, from January to September, China's cumulative production of crude steel was 52.735 million tons, an increase of 10.7% year-on-year; raw iron production was 485.517 million tons, an increase of 10.4% year-on-year; and steel production was 672.289 million tons, a year-on-year increase. 13.9%. Among them, long products output increased by 16.7%, an increase of 2.8 percentage points higher than steel; plate production growth rate was 10.3%, which was lower than the steel increase of 3.6 percentage points.
For the different performances of long products and plates, Zhang Changfu said: “The long products are mainly driven by the construction of infrastructure and the construction of affordable housing. Since the beginning of this year, the demand for manufacturing industries has been low, especially railways, shipbuilding, petroleum, chemicals, and electricity. The shrinking demand for steel products in industries such as light industry and light industry led to a significant slowdown in the growth rate of sheet metal products.†In addition, due to the rapid expansion of plate production capacity in recent years, the prices of related products have fallen sharply. According to the monitoring of the Steel Association, the average tax price of 3.0mm hot-rolled coils nationwide at the end of September was 4,916 yuan/ton, while the prices of 6.5mm Pu-high and 16mm III steel rebar at the same period were 5003 yuan/ton and 4,981 yuan/ton, respectively. In hot rolled coils.
The acceleration in the growth rate of steel investment is worthy of caution. Although the large-scale construction of infrastructure has stimulated the demand for long products and kept the price at a higher level compared with that of the plate, no matter whether it is infrastructure construction or manufacturing, compared with the same period of last year. This year's increase has shown a downward trend.
From January to September, China’s fixed asset investment increased by 24.9% year-on-year, down 0.1% year-on-year; investment in real estate development rose by 32.0% year-on-year and fell by 1.2% year-on-year. From the perspective of manufacturing industry, the production and sales volume of the machinery industry increased by 26.21% and 26.09% year-on-year, respectively, 3.23 and 3.43 percentage points lower than the growth rate of industrial production and sales in the country respectively; the production and sales volume of automobiles increased by 2.75% and 3.62% respectively, which was far below the same period of last year; New acceptance orders of the shipping industry decreased by 42.8% year-on-year, and hand-held orders fell by 13.8% year-on-year at the end of September.
"In this trend, the fixed assets investment in the steel industry has shown a trend of accelerating growth, which should arouse our concern." Zhang Changfu said.
In the first three quarters of this year, the growth rate of investment in fixed assets in the steel industry was lower than the national average, but it was higher than the same period of last year. According to statistics from the National Bureau of Statistics, from January to September, the fixed assets of the steel industry reached 371.7 billion yuan, an increase of 19.7% year-on-year, and 15.5 percentage points faster than the same period of last year. Among them, the ferrous metal mining investment was RMB 90.5 billion, an increase of 18.7% year-on-year, 0.7% lower than the growth rate of the same period of last year; the ferrous metal smelting and rolling investment was 281.2 billion yuan, a year-on-year increase of 20.0%, and 19.7 times faster than the growth rate of the same period of last year. percentage point.
In this regard, Zhang Changfu analyzed: “The investment of non-state-owned steel companies is growing faster than that of state-owned steel enterprises. From January to August, state-owned enterprise investment increased by only 5.8% year-on-year, while non-state-owned enterprise investment increased significantly by 39.3%.â€
The low benefit status is still continuing. According to the Steel Association’s forecast, from January to September, 77 key large and medium-sized iron and steel enterprises achieved total industrial output value (current price) increased by 23.07% year-on-year, achieving a year-on-year increase in sales revenue of 24.16%, and a year-on-year increase in profits and taxes by 19.26. %, total profit increased by 27.74% over the same period of last year.
“Although the total industrial output value, product sales revenue, profits, taxes, and total profits have all achieved growth compared to the same period of last year, it is worth noting that the growth rate is lower than the same period of last year, and the average sales margin was only 2.99%.†Qu Xiuli, deputy secretary general of the Steel Association and director of the financial assets department, said.
"In this 2.99%, if the deduction of some companies own mines, self-generated power, investment income, and profitability of Baotou Rare Earth, and other factors, the average profit margin is only about 1.5%." Zhang Changfu further stressed the steel industry is facing a grim situation.
According to customs statistics, from January to September, the average landed price of imported iron ore in China was US$165.74/ton, up by US$43.29/ton or 35.35% year-on-year, and China’s iron and steel industry paid more for imported iron ore prices.** 21.992 billion U.S. dollars. In addition, at the end of September, the price of coking coal was 1,695 yuan/ton, up by 23.27% year-on-year; the price of metallurgical coke was RMB 2007/ton, up by 17.16% year-on-year; the scrap price was 3,658 yuan/ton, up by 23.46% year-on-year.
“Iron ore, coal, electricity and other resources and energy prices have brought about a decline in profits, so that the steel industry is still in a high-cost, low-profit operating state.†Zhang Changfu said.
Corporate capital risk management must also be strengthened. In addition, due to the increase in interest rates, corporate financing costs have also increased significantly. According to the Steel Association’s forecast, from January to September, China’s key large and medium-sized steel companies’ financial expenses will increase by 34.13% year-on-year, an increase of 11.8 percentage points from the same period of last year.
Regarding the current financial problems faced by the steel industry, Qu Xiuli said in response to a reporter’s question: “Accommodating with the increase in interest rates, corporate financing costs have risen sharply. Moreover, judging from the current situation, it is more serious than the first half. She said that the current financial difficulties in the steel industry are mainly reflected in three aspects. One is ** difficult. In the capital chain of large and medium-sized steel companies, there are more than 1 trillion yuan in the banking sector. Due to the tightening of monetary policy, it is difficult for many steel companies to fall from the bank after the ** expires. The second is less cash flow. The iron and steel industry is a capital-intensive enterprise with a large amount of capital demand, but the current tight funding has led to the emergence of acceptance ** in the market. At present, about half of the sales of large and medium-sized steel companies are achieved through acceptance. Third, accounts receivable increased. At present, some steel companies have responded that some upstream and downstream companies have already defaulted on accounts receivable payables, making the steel market, which is already less prosperous, more sluggish.
Qu Xiuli suggested that steel companies should continue to accelerate the turnover of corporate funds, improve the efficiency of the use of corporate assets, at the same time reduce the receivable accounts payable, reduce inventory, control investment in the market when the market is not good, control the scale.
Slow growth rate of sheet products According to data from the National Bureau of Statistics, from January to September, China's cumulative production of crude steel was 52.735 million tons, an increase of 10.7% year-on-year; raw iron production was 485.517 million tons, an increase of 10.4% year-on-year; and steel production was 672.289 million tons, a year-on-year increase. 13.9%. Among them, long products output increased by 16.7%, an increase of 2.8 percentage points higher than steel; plate production growth rate was 10.3%, which was lower than the steel increase of 3.6 percentage points.
For the different performances of long products and plates, Zhang Changfu said: “The long products are mainly driven by the construction of infrastructure and the construction of affordable housing. Since the beginning of this year, the demand for manufacturing industries has been low, especially railways, shipbuilding, petroleum, chemicals, and electricity. The shrinking demand for steel products in industries such as light industry and light industry led to a significant slowdown in the growth rate of sheet metal products.†In addition, due to the rapid expansion of plate production capacity in recent years, the prices of related products have fallen sharply. According to the monitoring of the Steel Association, the average tax price of 3.0mm hot-rolled coils nationwide at the end of September was 4,916 yuan/ton, while the prices of 6.5mm Pu-high and 16mm III steel rebar at the same period were 5003 yuan/ton and 4,981 yuan/ton, respectively. In hot rolled coils.
The acceleration in the growth rate of steel investment is worthy of caution. Although the large-scale construction of infrastructure has stimulated the demand for long products and kept the price at a higher level compared with that of the plate, no matter whether it is infrastructure construction or manufacturing, compared with the same period of last year. This year's increase has shown a downward trend.
From January to September, China’s fixed asset investment increased by 24.9% year-on-year, down 0.1% year-on-year; investment in real estate development rose by 32.0% year-on-year and fell by 1.2% year-on-year. From the perspective of manufacturing industry, the production and sales volume of the machinery industry increased by 26.21% and 26.09% year-on-year, respectively, 3.23 and 3.43 percentage points lower than the growth rate of industrial production and sales in the country respectively; the production and sales volume of automobiles increased by 2.75% and 3.62% respectively, which was far below the same period of last year; New acceptance orders of the shipping industry decreased by 42.8% year-on-year, and hand-held orders fell by 13.8% year-on-year at the end of September.
"In this trend, the fixed assets investment in the steel industry has shown a trend of accelerating growth, which should arouse our concern." Zhang Changfu said.
In the first three quarters of this year, the growth rate of investment in fixed assets in the steel industry was lower than the national average, but it was higher than the same period of last year. According to statistics from the National Bureau of Statistics, from January to September, the fixed assets of the steel industry reached 371.7 billion yuan, an increase of 19.7% year-on-year, and 15.5 percentage points faster than the same period of last year. Among them, the ferrous metal mining investment was RMB 90.5 billion, an increase of 18.7% year-on-year, 0.7% lower than the growth rate of the same period of last year; the ferrous metal smelting and rolling investment was 281.2 billion yuan, a year-on-year increase of 20.0%, and 19.7 times faster than the growth rate of the same period of last year. percentage point.
In this regard, Zhang Changfu analyzed: “The investment of non-state-owned steel companies is growing faster than that of state-owned steel enterprises. From January to August, state-owned enterprise investment increased by only 5.8% year-on-year, while non-state-owned enterprise investment increased significantly by 39.3%.â€
The low benefit status is still continuing. According to the Steel Association’s forecast, from January to September, 77 key large and medium-sized iron and steel enterprises achieved total industrial output value (current price) increased by 23.07% year-on-year, achieving a year-on-year increase in sales revenue of 24.16%, and a year-on-year increase in profits and taxes by 19.26. %, total profit increased by 27.74% over the same period of last year.
“Although the total industrial output value, product sales revenue, profits, taxes, and total profits have all achieved growth compared to the same period of last year, it is worth noting that the growth rate is lower than the same period of last year, and the average sales margin was only 2.99%.†Qu Xiuli, deputy secretary general of the Steel Association and director of the financial assets department, said.
"In this 2.99%, if the deduction of some companies own mines, self-generated power, investment income, and profitability of Baotou Rare Earth, and other factors, the average profit margin is only about 1.5%." Zhang Changfu further stressed the steel industry is facing a grim situation.
According to customs statistics, from January to September, the average landed price of imported iron ore in China was US$165.74/ton, up by US$43.29/ton or 35.35% year-on-year, and China’s iron and steel industry paid more for imported iron ore prices.** 21.992 billion U.S. dollars. In addition, at the end of September, the price of coking coal was 1,695 yuan/ton, up by 23.27% year-on-year; the price of metallurgical coke was RMB 2007/ton, up by 17.16% year-on-year; the scrap price was 3,658 yuan/ton, up by 23.46% year-on-year.
“Iron ore, coal, electricity and other resources and energy prices have brought about a decline in profits, so that the steel industry is still in a high-cost, low-profit operating state.†Zhang Changfu said.
Corporate capital risk management must also be strengthened. In addition, due to the increase in interest rates, corporate financing costs have also increased significantly. According to the Steel Association’s forecast, from January to September, China’s key large and medium-sized steel companies’ financial expenses will increase by 34.13% year-on-year, an increase of 11.8 percentage points from the same period of last year.
Regarding the current financial problems faced by the steel industry, Qu Xiuli said in response to a reporter’s question: “Accommodating with the increase in interest rates, corporate financing costs have risen sharply. Moreover, judging from the current situation, it is more serious than the first half. She said that the current financial difficulties in the steel industry are mainly reflected in three aspects. One is ** difficult. In the capital chain of large and medium-sized steel companies, there are more than 1 trillion yuan in the banking sector. Due to the tightening of monetary policy, it is difficult for many steel companies to fall from the bank after the ** expires. The second is less cash flow. The iron and steel industry is a capital-intensive enterprise with a large amount of capital demand, but the current tight funding has led to the emergence of acceptance ** in the market. At present, about half of the sales of large and medium-sized steel companies are achieved through acceptance. Third, accounts receivable increased. At present, some steel companies have responded that some upstream and downstream companies have already defaulted on accounts receivable payables, making the steel market, which is already less prosperous, more sluggish.
Qu Xiuli suggested that steel companies should continue to accelerate the turnover of corporate funds, improve the efficiency of the use of corporate assets, at the same time reduce the receivable accounts payable, reduce inventory, control investment in the market when the market is not good, control the scale.
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