China's steel industry will continue to have low profits next year

The Ministry of Industry and Information Technology of the People's Republic of China recently released the 2012 report on China's industrial economic operation. The report pointed out that due to the pressure of higher prices for raw materials such as iron ore, increased homogeneity of product competition, and serious overcapacity, it is expected that the iron and steel industry will emerge next year. The high cost, low growth, low profit situation will continue.

According to the report, the steel industry will continue to maintain low growth and low profitability due to insufficient effective demand and overcapacity. Since the beginning of this year, due to the economic downturn both at home and abroad, the demand for steel products has slowed down significantly, the problem of overcapacity has been continuously highlighted, steel prices have fallen sharply, corporate profits have declined significantly, and industry operations have been difficult.

From January to November, the country produced 660 million tons of crude steel, an increase of 2.9% from the same period of last year, an increase of 6.9 percentage points from the same period of last year. Demand in the domestic market is weak, and more than 6% of production capacity is absorbed by exports. From January to November, the apparent consumption of domestic crude steel was 620 million tons, an increase of only 1.7% year-on-year, an increase of 8.5 percentage points from the same period of last year and 1.2 percentage points lower than the increase in production. Export of 54.13 million tons of steel, an increase of 12.7%, 13.74 million tons of steel imports, a year-on-year decrease of 13.5%, imports and exports net offset 40.38 million tons of crude steel, accounting for 6.1% of crude steel production. In the weak domestic market, export growth relieved the pressure of overcapacity to some extent, but it also caused more international trade friction. Steel prices continue to decline.

At the same time, affected by weak market demand, concentrated release of production capacity, and intensified competition in homogenization of steel products, steel prices continued to fall for five consecutive months after reaching the high point in the year at the beginning of April. According to the statistics of the Iron and Steel Association, the domestic steel price index fell below 100 in the first and second weeks of September. After mid-September, the price rebounded. At the end of November, the domestic comprehensive steel price index was 105.32 points, a decrease of 17.01 points over the same period of last year. 13.91%. Profit dropped sharply. According to statistics from the National Bureau of Statistics, from January to October, the profits of the metallurgical industry decreased by 48.3% year-on-year (an increase of 28.4% in 2011); the profit margin of the main business income was 1.68%, a year-on-year decrease of 1.57 percentage points; among them, the smelting and rolling processing industry The profit margin was only 0.99%, down 1.5 percentage points year-on-year. The loss of the company was 25.7%, and the losses of the loss-making enterprises increased by 2.4 times year-on-year.

According to the statistics of the Iron and Steel Association, from January to October, member iron and steel companies made profits and losses as a loss of 5.22 billion yuan, and the industry was in a net loss state. The problem of overcapacity is difficult to solve. According to the statistics of the Iron and Steel Association, China's annual crude steel production capacity was 718 million tons in 2009, 800 million tons in 2010, and 863 million tons in 2011, and it is expected to reach or exceed 900 million tons in 2012. According to the statistics of the National Bureau of Statistics, from January to November, the ferrous metal smelting and rolling processing industry has completed investment of more than 450 billion yuan, and it is estimated that it will form a production capacity of more than 50 million tons. According to relevant media reports, only more than 10 blast furnaces have been put into production in Tangshan and Chongqing, Hebei Province, this year, and more than 20 million tons of new production capacity has been added. The international market has limited capacity for digestion. According to the recent prediction of the World Steel Association (WSA), world steel consumption will increase by 2.1% and 3.2% respectively in the next two years, which is significantly lower than the level of 6.2% in 2011.