Sinochem New Reuters Zhu Jimin, president of the China Iron and Steel Industry Association, said recently that in October last year, the profit rate of the steel industry fell to a new low after dropping to the lowest point in history last October. In November, the profits of 256 Chinese Steel Association member companies reached a profit of only 1.22 billion yuan, which was a decrease of 180 million yuan from the previous month. The average profit margin of sales fell from 0.48% in the previous month to 0.43%, and the company’s loss ratio exceeded 1/1. 3. If the investment income is deducted, the company's net loss is 920 million yuan.
In January-November, the profit rate of steel products sold by the members of the China Iron and Steel Association was only 2.55%, far lower than the average profit rate of industrial enterprises above designated size in the same period.
Since the fourth quarter of last year, China's steel industry has experienced a sharp decline in profits. Zhu Jimin said that the main cause of this situation is the accumulation of contradictions between supply and demand and higher costs.
In the first three quarters of the year, China’s steel production capacity was greatly released. The country’s cumulative production of crude steel was 526 million tons, with an average daily output of 1.93 million tons of crude steel, equivalent to an annual output of 703 million tons of crude steel. On the other hand, the major downstream steel industry, especially the manufacturing industry, has seen a decline in the demand for steel products, which has led to a drop in steel prices. In November last year, the China Manufacturing Purchasing Managers' Index (PMI) was 49.0%, which was the first time since March 2009 that the index had fallen below the critical point of 50%, indicating that the domestic and international market demand for manufacturing slowed down.
The increase in the prices of iron ore, coking coal, scrap steel and other steel production raw materials has increased the production costs of steel enterprises. Because of the lagging effect of imported iron ore prices relative to steel prices, Chinese steel companies have fallen into the dilemma of “high-price ore production and sales of steel products at low pricesâ€. From January to November, the average cif price of imported iron ore in China was 166.21 U.S. dollars per ton, which was an increase of 39.81 U.S. dollars per ton from the same period of last year, which was an increase of 31.49%. From January to November, the cumulative import of 62.20 million tons of iron ore, steel companies increased spending 24.764 billion US dollars. The total cost of product sales for steel companies during the period from January to November in China Steel Association members rose by 23.6% over the same period of last year.
In addition, the net amount of accounts receivable from member steel companies in January-November increased by 19.82% year-on-year, and the net amount of accounts payable increased by 23.86% year-on-year. Some enterprises have to slow down or suspend investment in some projects in order to ensure the normal operation of production and operations.
In January-November, the profit rate of steel products sold by the members of the China Iron and Steel Association was only 2.55%, far lower than the average profit rate of industrial enterprises above designated size in the same period.
Since the fourth quarter of last year, China's steel industry has experienced a sharp decline in profits. Zhu Jimin said that the main cause of this situation is the accumulation of contradictions between supply and demand and higher costs.
In the first three quarters of the year, China’s steel production capacity was greatly released. The country’s cumulative production of crude steel was 526 million tons, with an average daily output of 1.93 million tons of crude steel, equivalent to an annual output of 703 million tons of crude steel. On the other hand, the major downstream steel industry, especially the manufacturing industry, has seen a decline in the demand for steel products, which has led to a drop in steel prices. In November last year, the China Manufacturing Purchasing Managers' Index (PMI) was 49.0%, which was the first time since March 2009 that the index had fallen below the critical point of 50%, indicating that the domestic and international market demand for manufacturing slowed down.
The increase in the prices of iron ore, coking coal, scrap steel and other steel production raw materials has increased the production costs of steel enterprises. Because of the lagging effect of imported iron ore prices relative to steel prices, Chinese steel companies have fallen into the dilemma of “high-price ore production and sales of steel products at low pricesâ€. From January to November, the average cif price of imported iron ore in China was 166.21 U.S. dollars per ton, which was an increase of 39.81 U.S. dollars per ton from the same period of last year, which was an increase of 31.49%. From January to November, the cumulative import of 62.20 million tons of iron ore, steel companies increased spending 24.764 billion US dollars. The total cost of product sales for steel companies during the period from January to November in China Steel Association members rose by 23.6% over the same period of last year.
In addition, the net amount of accounts receivable from member steel companies in January-November increased by 19.82% year-on-year, and the net amount of accounts payable increased by 23.86% year-on-year. Some enterprises have to slow down or suspend investment in some projects in order to ensure the normal operation of production and operations.
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