The loss situation of the steel industry reverses the industry's “snowy preparations” for the new winter

On the 9th, the annual meeting of the All-China Metallurgical Chamber of Commerce (2016) was held in Zhangjiagang, Suzhou. Shen Wenrong, president of the Chamber of Commerce, said: "This year, due to the rise in steel prices, the operating conditions of steel companies have generally improved, and the loss of the whole industry has been reversed." However, the industry and experts attending the meeting are cautious about the development of the industry for some time to come.
In 2015, China's steel consumption and output fell from the peak arc zone. The domestic steel price index fell by more than 30% year-on-year, and the settlement price of tons of steel fell by about 800 yuan. "On average, private steel enterprises will have to pay 20 yuan for selling one ton of steel." The entire steel industry entered a severe winter period.
Since December 2015, the domestic market steel prices have ended a four-year decline and began to pick up. “As of September, the steel price composite index averaged 75.56 points, an increase of 14.37 points over the previous year, an increase of 23.48%”. Shen Wenrong introduced.
According to the data provided by China Iron and Steel Association, from January to September this year, key large and medium-sized steel enterprises realized a profit of 25.209 billion yuan, an increase of 53.133 billion yuan year-on-year; sales profit was 1.27%, an increase of 2.56 percentage points year-on-year. In the same period, the cumulative export of steel products was 85.12 million tons, a year-on-year increase of 2.4%; the net export of steel was equivalent to 78.09 million tons of crude steel, an increase of 1.65 million tons, an increase of 2.16%.
“The iron and steel industry has changed from the abnormal pessimism of last year to the joy of the present,” commented Yang Yongliang, general manager of China United Steel. However, he also believes that this kind of good situation is difficult to last, and the industry must now "smooth weather is warm" and deal with "the next winter" as soon as possible.
Song Jijun, vice president of the Henan Metallurgical Industry Association, also held a similar view. He analyzed that the current trend of sharp growth in the profitability of the steel industry "is not only the support of the sharp rise in steel prices this year, but also the bottoming out of the profit loss of the whole industry last year and the rebound of the steel comprehensive price index, which is a kind of recovery growth."
Song Jijun emphasized that although the steel industry achieved substantial profit growth this year, the "great relationship between supply and demand has not changed fundamentally." The current situation may not last long. However, he said, "The steel industry is likely to maintain a stable trend in the fourth quarter of this year."
In Shen Wenrong's view, differentiated development, optimized value chain, product transformation and upgrading are still the focus of future steel companies. He urged private steel companies to "make a clear view of the situation and maintain the strength of transformation and development, not to be shaken by the short-term improvement situation, and to lay a solid foundation for long-term development."