Significant improvement in steel prices in the first half of 2016 profit
After five years of production go after the black line under the long-standing China Galvanized Corrugated Roof Sheet
industry has finally bid farewell to the year after the loss, to achieve profitability. Recently, dozens of iron and steel enterprises semi-annual report released in 2016, showed a significant improvement in earnings. Among them, Baosteel net profit even as high as 3.468 billion yuan, up by 9.26%, to achieve a leap.
But it is worth noting that, despite the end of this year, steel demand has stabilized, but a long period downward trend has not changed, still the long-term overcapacity problems. It also means to resolve excess capacity, industry consolidation will continue to be China's steel industry over a long period of time needed to tackle tough issues.
Pick up first-half profit doubled
Wind Info data show, SW classified under the steel plate 35 steel enterprises total revenue of 466.117 billion yuan, representing a decline over the same period in 2015, but the profit of up to 4.279 billion yuan, a year earlier loss of 4.094 billion yuan.
Specifically, these 35 companies have 28 profit, profit of steel enterprises accounted for 80%, an increase of 28.57%. In addition, a total of 35 listed companies, 10 companies achieved profitability, accounting for 59% of last year's losses. Among them, Baosteel achieved operating income of 77.993 billion yuan, down 3.44% year on year, but net profit attributable to shareholders of listed companies 3.468 billion yuan, up by 9.26%. Among them, Baosteel manufacturing sector gross margin was 17.7%, up 5.4 percentage points. Shandong Iron and Steel, although not much profit, net profit of 23.1513 million yuan, a year earlier but increased 210.57 percent. As can be seen, after three years of production to be able to adjust the structure, "Iron boss" finally see the dawn.
China Steel Industry Association president Ma Guoqiang said that since 2012, the domestic market, steel prices had fallen, falling more than 4 years. December 2015, the lowest composite steel price index fell 54.48 points, the lowest level recorded since the index, down 34.43 percent over the end of 2014. This year, steel prices have rebounded. To the end of April, the highest composite steel price index rose 84.66 points, steel prices higher than last year first time in years.
A substantial decline in steel stocks of steel prices played a supporting role. June, 20 cities in five varieties of steel inventories 8.13 million tons, down 2.06 million tons, a decline of 21%, five species inventories are lower than last year. According Steel Association statistics, the end of June iron and steel enterprises steel stocks was 13.38 million tons, down 4.37 million tons, a decline of 24.63%.
"The first half of this year fluctuations in steel prices, the stage and improve the local supply is the main reason the market is expected to improve, all steel-related varieties of futures market contract prices also fluctuate significantly. Steel prices improving business conditions to ease the difficulties the industry but dramatic fluctuations also have a great impact on production operations running smoothly. "Ma Guoqiang said.
Indeed, China Steel Association data show that the first half of the member steel enterprises realized sales income of 1.29 trillion yuan, down 11.93 percent; profit of 12.587 billion yuan, an increase of 4.27 times; loss-making enterprises fell by 22.8%; but the profit margin 0.97% in the industrial sector is still at a low level.
Difficult challenge in the second half of demand side surge
China Steel Association data show that in July 2016, 99 medium-sized steel enterprises realized sales income of 222.051 billion yuan, total profit of 3.822 billion yuan loss-making enterprises 20, a loss of 20.2%, a loss of loss-making enterprises amounted to 1.488 billion yuan; 1 From January to July, the member steel companies break even after a total profit of 16.348 billion yuan, achieved profitability, but the monthly situation, only 3.822 billion yuan in July, two consecutive months of decline, the level of profitability of steel companies still low.
Some analysts believe that the second half of the steel industry is still facing a severe situation. Despite the limited production in September G20 summit in Hangzhou, Tangshan still under three programs as well as limited production capacity to group supervision in the background, the second half of steel production is unlikely to grow significantly, but the industry is still hard to supply and demand or a significant improvement. Ma Guoqiang pointed out that the second half of steel demand growth is still difficult. "Although the May crude steel apparent consumption growth year on year, but this is only short-term fluctuations, it does not change the long-term downward trend."
He said that, objectively speaking, the market demand is not as strong as the first half of the market price reflects. The current round of price volatility, improving demand is just one of the reasons more factor is the price of four consecutive years of decline, falling deep, serious business losses led to a general cut-off, limited production and improve the supply and demand relationship.
"But the second half of the demand side, most of the major downstream steel industry boom of the poor, such as machinery, shipbuilding, container, household appliances and other industries will continue the downward trend in the first half, although the real estate and automotive industries will maintain a certain growth. Private Investment poor growth so that investment stimulating effect on economic growth weakened, the only rapid growth of investment in infrastructure, the second half is expected to continue to maintain rapid growth. overall, the downstream demand is weak. "Ma Guoqiang said.
From the international market, according to Ma Guoqiang, the future international environment of increased uncertainty, which will also affect the demand for the steel industry changes. The World Bank's latest report on June 7 once again lowered the expected global economic growth and the major developed countries, the possibility of major changes in the world economy is increasing.
The direction of mergers and acquisitions is the highlight
Recently, China reiterated at the G20 summit will be in five years time to Yajian 100 million to 150 million tons of crude steel production capacity, also decided to solve the global steel overcapacity set a timetable. In addition, G20 leaders agreed to set up a global forum on global steel oversupply problem, respond to the global oversupply concerns, will be overcapacity as a global economic issues are discussed.
Insiders said that in the above-mentioned five-year goal guidance, to 2020, China is expected to achieve backward steel production will not meet the technical requirements of the standard equipment can all be eliminated, the majority destitute steel companies turn around, zombies do business should be returned back.
In the future China to resolve the overcapacity in the process of corporate mergers and acquisitions will be the top priority. Deputy Secretary General of China Iron and Steel Industry Association, Wang Yingsheng recently said that the steel industry is to implement the State Council document, effectively resolve excess capacity between the second half of the iron and steel enterprises mergers and acquisitions, bankruptcy will accelerate the pace of integration.
In fact, Baosteel and Wuhan Steel shares have pulled the curtain round of restructuring the steel industry mergers and acquisitions. Industry sources, from the beginning of this year, SASAC Baosteel, Wuhan Iron and communicate separately on the merger, hoping to be formed to the south of the Yangtze River's largest steel group by combining to play a greater competitive advantage. Original restructuring plan in September, and now the pace has accelerated.
"Implementation of Baosteel and Wuhan Iron and Steel reorganization is the benchmark, marking the corporate mergers and acquisitions into a new phase." Ma Guoqiang said.
In fact, according to industry sources, the future will be the integration of regional resources as the main direction, forming 1-2 international level large steel enterprises, 4-6 regional-based large steel enterprises, large and extra-large steel enterprises in the proportion of the country's total crude steel production capacity more than a third.
Ma Guoqiang stressed in 2016 to resolve the overcapacity tasks are clear in the second half into the implementation and verification stage, complete resolve the overcapacity task still facing employee relocation and debt disposal two problems, how to properly arrange workers in difficult times, how tight funds under the circumstances to resolve the debt risk, a lot of work needs to be done.
But Ma Guoqiang believes that to resolve the excess capacity still very arduous task. With steel prices rise, crude steel production release, part of the cut-off device and resume production, crude steel production levels rise month on month, again stepped up to resolve the overcapacity arduous task.
"At the same time, enterprise funds remained tense." Ma Guoqiang said that at this stage some steel companies are still subject to strict control of the banking system overcapacity in restraint of trade credit scale, financial tensions increasing difficulties in financing, financing your problem has not been effectively alleviated and even some large enterprises are pumping loans, the pressure loans, maturing loans Xudai very difficult, more stringent audit corporate bonds. Future steel companies still need to address the problem of fund shortage, Take Measures to raise funds.
In the environment, the future of the iron and steel enterprises will significantly strengthen environmental constraints, which will continue to encourage steel enterprises to launch a new round of environmental protection projects, Beijing, Tianjin, the Yangtze River Delta, Pearl River Delta and Yangtze River economic zone and other areas as special discharge of air pollutants geographical restrictions, the implementation of standards will be more stringent.