Lgmi: December steel earnings exceeded expectations?Update time:2017-12-13 Click:
A, November 2017 Cost and profitability analysisAs can be seen from Figure 1, the cost index of Lange pig iron shows that the pig iron cost index continued its downward trend in November, down from 97.1 at the beginning of the month to 90.1 at the end of the month, with a mean decrease of 6.4% over the previous month.
According to the steelmaking inventory inventory of about 30 days, the cost of the charge in November needs to be analyzed first in October of iron ore, coke market conditions:
Domestic iron concentrate prices in October, imports of iron ore prices continued to decline. According to Lange steel cloud business platform monitoring data show that on October 31, Tangshan 66% grade dry-type iron powder price of 640 yuan, down 5 yuan from the end of last month, down 0.8%; imported iron ore, Australia 61.5 % Pink ore Rizhao Port market price of 455 yuan, down 38 yuan from the previous month, a decrease of 7.7%.
Metallurgical coke prices showed sharp drop in prices in October. According to Lange steel cloud business platform monitoring data show that on October 31, Tangshan metallurgical coke second-tier price of 1850 yuan, down 440 yuan the previous month, a decrease of 19.2%.
Overall, the average production cost for November 2017 delivered to steel mills decreased from the previous month due to the drop in iron ore and coke prices in October.
Second, in 2017 December earnings outlook
January-October industry profits continue to grow
Since the beginning of this year, with the continuous deepening of structural reform on the supply side of the country, the steel industry has shown a good trend in terms of supply and demand, rising steel prices and significant improvement in corporate profits. In October, with the steel price fluctuating at a high level and iron ore and coke continued to fall, profitability of the steel industry continued to grow. According to National Bureau of Statistics data show that from January to October 2017, ferrous metal smelting and rolling processing industry to achieve operating income 607143000000 yuan, an increase of 23.3%; total profit of 273.73 billion yuan, an increase of 162.2%, an increase of more than January-September Expand 43.7 percentage points.
In October, the sales profit margin of the steel industry further increased to 4.69%, up 2.06% from the end of 2016. Supply-side reform led to better sales profit in the iron and steel industry. However, compared with other industries, the profit margin in the iron and steel industry At a lower level.
The success of China's supply-side reform has contributed to the development of the global steel industry
The continuous improvement of the performance of China's steel industry fully shows that China's supply-side structural reforms have achieved remarkable results. At the same time, it is closely linked to the intensification of management by most steel companies in their efforts to reduce costs and increase efficiency. They are also in line with the trend of iron ore prices and steel prices And to maintain a reasonable spread related.
Overcapacity is a universal, periodic and structural problem that arises during the global economic development. It is not a peculiar economic phenomenon in the steel industry. It is a common difficulty and challenge facing all countries in the world. It is not a unique issue for China. In recent years, the Chinese government has taken the initiative as a structural reform in the supply side of the steel industry. Through market-oriented and law-based measures, the Chinese government has taken the initiative to resolve excess capacity. The goal is clear, the measures are effective and the results are remarkable. Since 2016, China has eliminated over 150 million tons of backward steel production capacity. To this end, China paid a huge price and overcame various difficulties. In 2016 alone, the iron and steel industry relocated a total of 201,000 workers, surpassing the total number of people employed by steel in the United States and Japan, equivalent to 60% of the total number of people employed in the steel industry in Europe. China took the lead in resolving excess steel production capacity and is a conscious, proactive, resolute and sustained move that is necessary for its own development. It has also made an important contribution to the development of the world steel industry.
Steel prices will remain profitable in December
In December, the market demand will be further weakened. With the expansion of the limited production range during the heating season, the supply is expected to be further strengthened and the low inventory will provide more support to the market. However, the steel mills have substantially raised the steel prices and the raw material costs in the downstream steel industry are still high. With limited capacity. With the profit-driven steel mills increasing their shortage of resources and accelerating the pace of "northbound timber going south," the shortage of resources in the market is expected to be reversed. In December, the domestic steel market will have a high fall-off risk, but the overall steel price Still continue the high running situation. From the raw material market, the cost of steel production declined in December due to the drop in coke prices in November. The Lange Steel Research Center expects the profitability of steel mills to remain at a high level in December.