Steel prices have risen by over a thousand, and steel companies have generally turned losses into profits.
Release time:
2024-08-14
Since the first half of last year, driven by a series of measures such as supply-side reform and the elimination of outdated production capacity, steel prices have begun to recover. Taking rebar as an example, the average price on March 9 last year was 2475 yuan/ton, and it has risen to 3852 yuan/ton on March 9 this year, an increase of 35%. Benefiting from the rise in steel prices, the performance of steel companies has significantly improved. In 2015, Nanjing Steel, Liuzhou Steel, and *ST Shaogang reported losses of 2.432 billion yuan, 1.189 billion yuan, and 2.596 billion yuan, respectively. Last year, these three companies reported losses of 2.432 billion yuan, 1.189 billion yuan, and 2.596 billion yuan, respectively. The steel companies achieved profits of 350 million yuan, 185 million yuan, and 101 million yuan, respectively.
Since the first half of last year, driven by a series of measures such as supply-side reform and the elimination of outdated production capacity, steel prices have begun to recover. Taking rebar as an example, the average price on March 9 last year was 2475 yuan/ton, and it has risen to 3852 yuan/ton on March 9 this year, an increase of 35%.
Benefiting from the rise in steel prices, the performance of steel companies improved significantly last year. In 2015, Nanjing Steel, Liuzhou Steel, and *ST Shaogang reported losses of 2.432 billion yuan, 1.189 billion yuan, and 2.596 billion yuan respectively. Last year, these three companies reported losses of 2.432 billion yuan, 1.189 billion yuan, and 2.596 billion yuan respectively. The steel companies achieved profits of 350 million yuan, 185 million yuan, and 101 million yuan.
According to statistics from the China Iron and Steel Association, in 2016, large and medium-sized steel enterprises achieved a total sales revenue of 2.80 trillion yuan, a year-on-year decrease of 1.81%, but the total profit turned from a loss of 84.7 billion yuan in 2015 to a profit of 30.378 billion yuan, achieving a turnaround.
Since 2016, the steel industry has also begun the process of capacity reduction. However, according to the National Bureau of Statistics, in 2016, China's crude steel, pig iron, and steel output were 808 million tons, 701 million tons, and 1.139 million tons respectively, with year-on-year growth of 1.24%, 0.74%, and 2.30%; China's crude steel output accounted for 49.6% of global output, with a year-on-year increase of 0.2%; domestic crude steel consumption was 709 million tons, a year-on-year increase of 2.08%. It can be seen that capacity reduction did not directly affect the output of the steel industry, so the price surge should be closely related to demand fluctuations.
On March 5, this year's government work report clearly stated, "This year, we will further reduce steel production capacity by about 50 million tons, exit coal production capacity of more than 150 million tons, and at the same time eliminate, suspend, and slow down coal power capacity of more than 50 million kilowatts, to prevent and resolve the risk of overcapacity in coal power, improve the efficiency of the coal power industry, and create space for the development of clean energy."
Although this year's target is to eliminate 65 million tons of steel production capacity, the actual completion of coal production capacity last year was 290 million tons. However, considering that most of the steel production capacity eliminated last year was ineffective capacity, the output remains at historically high levels. This year, supply-side capacity reduction is expected to further develop in a substantive direction, especially in the first half of the year, when all rebar production capacity will be eliminated, which will have a substantial impact on market supply.
As the market enters the peak consumption season of "golden March and silver April," there is an expectation of further improvement in demand. On the supply side, the National Development and Reform Commission has clearly prohibited the production of construction steel using industrial frequency furnaces and medium frequency furnaces in the first half of the year. During the Two Sessions, steel mills in North China limited production by 50%, and the Ministry of Environmental Protection's irregular environmental inspections will also affect overall supply, especially the supply of construction steel will still be significantly suppressed.
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