Steel trading is not good this year

After the New Year was over, the steel companies released the 2011 annual report in succession, and the loss was almost the only synonym for the industry in the previous year. The bleak management situation is a concentrated microcosm of market factors, and all parties are increasingly looking forward to the early arrival of the steel industry in 2012.

Increased costs, insufficient market momentum

Angang Steel Co., Ltd. recently released its 2011 annual results announcement. The main reason for the loss was attributed to the fact that the increase in raw material prices was higher than the increase in steel prices and the maintenance of blast furnaces. Special mention was made of the sharp decline in steel prices in the fourth quarter, and the prices of major raw materials were still operating at high levels. The company fell into losses in the fourth quarter, which eventually led to annual losses.

Handan Iron & Steel also immediately released its 2011 annual report. According to the company's explanation, the 2011 steel price dropped significantly, while the decrease in raw material prices was relatively small, resulting in a large amount of operating losses in the company in the fourth quarter, which also led to a significant impairment of the company's inventory.

In addition to the cost reductions that have led to a contraction in the profits of steel companies, the downturn in the consumer market is another major factor. In 2011, cities have successively introduced real estate control measures, and the real estate industry has been hit hard. As the mainstay of steel consumption, the real estate sector has bid farewell to the crazy era. At the same time, the automotive industry with large steel consumption is no longer arrogant in 2011, and the growth rate has dropped sharply. According to data from the China Association of Automobile Industry Industry, the production and sales of domestic automobiles in 2011 were 18,419,900 and 18,505,100, respectively, an increase of 0.84%. And 2.45%, down 31.6% and 29.92% percentage points over the previous year, the growth rate is a new low in 13 years. According to the analysis of professionals in the industry, no new demand growth point has emerged from the reaction of all parties in the market. This is also a significant feature of the current steel market.

According to analysis by industry insiders, from the perspective of supply, the country's crude steel production in 2011 was approximately 683 million tons, and analysts even believe that the production capacity is still apparently surplus. Secondly, from the demand point of view, taking real estate as an example, the joint metal net report stated that under the background of domestic regulation and control not to change, and monetary policy does not have a comprehensive turn to ease, next year, the declining trend of real estate investment is determined and it is initially expected to decline from the full year. At around %, the demand for steel products will also weaken. Uncertain factors in the external appearance situation have made it difficult to be optimistic about the export situation of steel products. Together with the relatively high level of steel products in 2011, it is expected that steel prices will decline by about 5% in 2012 compared with 2011, and the steel prices of the whole year may be lower than before. After the high, or will form a gradual upward trend.

Steel trading companies are sad

The sluggish steel and iron industry has directly dragged down the business performance of steel trading companies. Under the influence of the continuous regulation and control of the domestic real estate industry and the slowdown in railway construction, the steel industry is in a depressed state, and the days of the small and medium-sized steel trading companies in the downstream are particularly sad.

The reporter learned from interviews that in 2011 some large steel traders suffered losses of several tens of millions of yuan. Some small steel traders were even unsustainable. They chose to temporarily close the door. Industry researchers said that the status of the steel companies' gloomy operations will last for at least one year. The above data from the Steel Production Industry Association indicated that due to the decline in market demand, the production of crude steel continued to decrease for the fifth consecutive month since the second half of 2011, and the daily production of crude steel dropped from the highest of nearly 2 million tons in June to November. The 1.66 million tons. The China Iron and Steel Association revealed recently that the profits of iron and steel enterprises in October and November of 2011 were only 1.4 billion yuan and 1.22 billion yuan. The average sales revenue profit margin was 0.48% and 0.43%, respectively, and the company’s loss ratio exceeded 1 /3.

Mr. Li, who has been in the steel business for many years, introduced that at the time of 780 yuan per ton of steel at the time, but only a dozen dollars per ton of iron ore, the cost was very low, and steel mills could earn about 1,000 yuan per ton. Steel mills are also willing to separate some of their profits from steel trading companies. The price of iron ore is now more than 140 US dollars per ton, and the market is about 4,200 yuan in secondary screw-patterned steel. The cost of raw materials has risen more than tenfold, labor costs have doubled, steel prices have remained unchanged, and steel mills have suffered losses. Naturally, the days of steel trade companies have been hard. One of the market analysts of a steel trade company in Jilin Province also stated that their company is an agent of Shougang in the northeastern region, with an annual business of RMB 2-3 billion. The steel and iron plates they set for the company in the past two years have been Loss, the situation in 2010 is not very good, at least seven or eight months in a year are losing money, the company sold 560,000 tons of steel last year, a direct loss of 56 million. Although the steel mills have a certain subsidy, they still pay a small fee. For the future market price trend, it is still not easy to judge, but the current investment is too much, it is difficult to leave, can only take a step forward.

Market may usher in a turnaround

The 1.467 million tons of inventory increase during the Spring Festival this year is the lowest increase in domestic steel stocks since 2008. "My steel network" analyst pointed out that the steel stocks during the Spring Festival hit a new low in five years, on the one hand that the domestic steel prices in the holiday to control the pace of production, production did not appear to release; the other hand, shows that traders still maintain the market With a more cautious attitude, he did not dare to stock up easily. However, due to the early end of the Spring Festival this year, the steel mills began to gradually increase production capacity, but the post-holiday market demand is lower than in previous years, steel sales face no small difficulties, so the possibility of rising total inventory inventory is more likely.

Although the days of the steel trading companies are now as cold as winter, it will take a long time before the warm spring comes again. Industry insiders estimate that if the external environment has not been fundamentally improved, the downturn of the steel trade enterprises will continue during the year.

In addition, the current festive atmosphere has not subsided, the downstream enterprises in the south have not fully resumed work, the temperature in the north is still low, the effective demand is relatively low, resulting in the steel market trading atmosphere is not active. Affected by the Spring Festival breaks, the probability of steel production and stocks rebounding once again increased, but steel prices lacked material benefits. Only cost factors supported, and the latest factory prices of steel mills also opened, reflecting the market still There is a strong wait-and-see mood, lack of market confidence, high capital costs, businesses tend to take fast forward and fast out, reduce the risk of inventory operations, the formation of a certain suppression of steel prices. Overall, the steel market is still basically weak, demand is decreasing, and inventory will also gradually increase.

However, some analysts believe that some downstream production enterprises in the South are gradually entering the right track after the Lantern Festival. At the same time, as temperatures continue to rise, the construction industry in the north will start construction again in March to drive steel demand. Thus, although the market is not as good as in previous years, in the next 2-3 months, the domestic steel market is still the main tone. An industry expert also analyzed that with the advancement of the construction of affordable housing, machinery, automobiles, shipbuilding and other industries have recovered, and steel demand will increase.

For the 2012 steel market, some analysts are still optimistic. Hu Yanping, an analyst at United Metals, believes that in the year of the start of the Year of the Dragon, the domestic steel market should end the five-month downturn as scheduled, and entering the uptrend channel, bank credits will usually show highs and lows, generally in the first quarter. The scale of mortgage loans is the first of four quarters. Therefore, the funds for steel traders at the beginning of the year are relatively abundant. It has been discovered from the operating rules of the past years that businesses with more resources at hand tend to increase their enthusiasm for pulling up prices.