Gu Jianguo, the iron and Steel Industry Association: this year's profit growth of the iron and steel industry is a rational return
on November 24, Gu Jianguo, the executive vice president of the China Iron and Steel Industry Association, said that in 2017, the iron and steel industry achieved a steady and positive development trend based on last year's trough, and the enterprise benefits increased steadily, but it did not significantly squeeze the profit space of downstream industries, and the rise in the profit level of the iron and steel industry belongs to the scope of reasonable return
Gu Jianguo said: 1. The maximum experimental force: 100kN. This year's steel demand is better than expected. Although the cumulative completion of fixed asset investment in June increased by only 7.3% year-on-year, the investment in infrastructure construction in the tertiary industry (excluding the production of electricity, heat, gas and water) increased by 19.6% year-on-year, accounting for 21.84% of the completion of fixed assets, an increase of 2.25 percentage points over the same period last year, and the growth rate of infrastructure investment with high steel intensity, such as public infrastructure, transportation, etc. was significantly higher than that of other industries. The continuous improvement of key macroeconomic indicators indicates that the macro economy has shown a good operating trend. The rapid growth of infrastructure construction investment and the recovery of industrial output growth ensure the steady rise of the total steel consumption
in addition, Gu Jianguo believes that the total supply capacity of the market has not been weakened by the complete ban on steel bars. By resolving excess steel production capacity and completely banning steel bars, the utilization of China's steel production capacity has basically returned to a reasonable range. "At present, China has banned more than 700 ground bar steel enterprises with a production capacity of about 140 million tons. Although the capacity of ground bar steel is large, the actual output of ground bar steel is far from the capacity scale. Do not estimate the amount of ground bar steel too high, which will lead to wrong conclusions and cannot be taken for granted". He said that there would be a phased supply shortage in the areas where the steel bars are concentrated, but this shortage would soon be made up by the production increase of compliant enterprises and the inflow of steel from other regions
he said that in January, the production of pig iron and crude steel in China increased by 2.73% and 6.14% respectively. If the market needs, compliant enterprises can have the potential to release production capacity. Crude steel enterprises increased production by 41.04 million tons, and steel exports decreased by 28.14 million tons, making up for the supply gap of strip steel. Tight supply in some regions is a normal phenomenon. "In the past 10 months, the relationship between supply and demand was basically stable. Now we are concerned about the impact of environmental protection measures taken in the heating season on supply and demand."
Gu Jianguo introduced that compared with many years ago, the human cost, capital cost and other factor costs of iron and steel enterprises are increasing significantly. Iron and steel enterprises resolve the cost pressure by improving production efficiency. However, improving efficiency requires technical input, and all inputs need to have a certain benefit return. The rise in price is not only a response to the rise in factor costs, but also a response to technical input. "There is no foam in the existing steel price when the pendulum is hung on the release device, but it is mainly based on the reasonable return of supply and demand"
he said that since this year, the economic benefits of most iron and steel enterprises have continued to improve, and some iron and steel enterprises that have suffered long-term losses for various reasons have also turned losses into profits. In January, the sales profit margin of member enterprises of the steel association was 4.18%, and the benefits of steel enterprises continued to improve, which fully shows that the structural reform on the supply side of steel is successful. At the same time, it is closely related to the strengthening of management, cost reduction and efficiency increase of most iron and steel enterprises, as well as the synchronization of iron ore price trend and steel price trend and the maintenance of a reasonable price difference
he stressed that the reasonable price difference between iron ore and steel prices in the past two years has not weakened the profits of iron ore enterprises. On the contrary, the profits of the world's major mining enterprises increased significantly in fiscal 2017. The benefits of the steel industry have improved significantly, while the profits of the main downstream manufacturing industries of steel are still considerable. For example, in ferrous metal smelting and processing industry, the sales profit margin in 2017 was 4.51%, an increase of 1.95 percentage points over the same period in 2016. The sales profit rate of metal products industry is 5.09%, that of general equipment manufacturing industry is 6.36%, that of special equipment manufacturing industry is 6.3%, and that of automobile manufacturing industry is 8.06%, which are higher than that of ferrous metal smelting and rolling processing industry, indicating that the rise of steel price does not significantly squeeze the profit space of downstream industries, and the rise of profit level of steel industry belongs to the reasonable regression category
"2018 should be a year for the iron and steel industry to get out of the trough in 2016 and continue to be stable on the basis of stability and improvement in 2017". Gu Jianguo believes that opportunities outweigh challenges in 2018. On the whole, the supply and demand of steel market is basically stable, and the oversupply of iron ore will continue
he stressed that deleveraging is a very urgent task for the steel industry at present. Steel enterprises should seize the favorable period and effectively improve the asset liability structure. The asset liability ratio of the steel industry exceeded 70% in 2015. The asset liability ratio decreased in 2016 and this year, but it is still at a high level. The depreciation rate and flow rate ratio of fixed assets are also at a historically poor level, and the heavy industrial burden is an important problem for a considerable number of steel enterprises
"from the perspective of industry assets and liabilities, the deleveraging effect of the steel industry is not obvious, and it is far from catching up with the production capacity effect. I hope relevant parties will strengthen their efforts in 2018. Operators should first understand that the universal experimental machine supports the deleveraging work of the steel industry, and speed up the withdrawal of zombie enterprises and the re disposal after de production", he said
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