The fall of the industry's profits to "freezing point" is only the beginning of the "winter" of the steel industry. The reporter learned from the China Iron and Steel Industry Association's 2012 directors (expansion) meeting on the 5th that the steel industry's operating conditions are continuing to deteriorate. Near the end of the year, at the internal meeting of the high-level steel industry, the leaders of large steel mills such as Baosteel, Shougang and Anshan Iron and Steel, who participated in the meeting, were generally not optimistic about the situation in 2012. In their view, the current steel industry dilemma is only a severe winter. At the beginning, the steel industry will face a more severe situation in 2012. “From January to November 2011, the profit margin of member companies included in the steel association statistics fell to 2.55%. In October and November, the profits of member steel companies were only 1.4 billion yuan and 1.22 billion yuan. The average sales revenue margins were only 0.48% and 0.43% respectively.†Zhu Jimin, chairman of China Iron and Steel Association and chairman of Shougang Corporation, said at the meeting. What is even more worrying is that he particularly emphasized that the steel company in China Steel Association had a net loss of 920 million yuan in November 2011, and the loss of the company has exceeded 1/3. According to information obtained by the reporter from the China Steel Association, 9 out of 77 large and medium-sized steel companies in September 2011 lost money, and in October they increased to 25 losses, and the loss increased to 32.5%. In November, the loss was further expanded to about 37% level. Behind the hardships of the steel industry, the cost of raw materials, mainly iron ore, remains high. According to the latest statistics, the average CIF price of imported iron ore from January to November 2011 was US$166.21/ton, an increase of US$39.81/ton over the same period of the previous year, up 31.49%. From January to November 2011, the cumulative import of iron ore was 62.201 million tons, and the increase was 24.427 billion US dollars. On the whole, the total product sales cost of member companies included in the steel association statistics from January to November 2011 increased by 23.6% over the same period of the previous year. “In 2011, the operation of the steel industry showed that steel exports continued to decline, product structural contradictions were further prominent, capital costs increased, and benefits were significantly reduced.†Zhu Jimin said that the main reason for the sharp decline in profits in the fourth quarter was the large capacity at the end of the year. On the other hand, the downstream steel industry, especially the manufacturing industry, has slowed down the demand for steel, which has led to a fall in steel prices. In addition to the market's own factors, the substantial increase in corporate financing costs is another major problem that plagues enterprises. The reporter learned from the statistics of the Steel Association that from January to November 2011, member steel companies, short-term bank loans increased by 28.87% year-on-year, long-term bank loans decreased by 6.17%, and enterprises incurred higher financing costs. In addition, corporate bank acceptance bills The discounted amount has risen sharply and the discount rate has been continuously raised, resulting in a significant increase in the discounted bills for corporate bills. Especially after September 2011, the issuance of bank acceptance bills has also been greatly affected, resulting in more strained corporate funds. According to statistics, the financial expenses of member steel companies from January to November 2011 increased by 37.18% year-on-year. The entire steel industry is facing the problem of financing difficulties and substantial increase in capital costs. It is worth noting that due to the tight capital, the amount of accounts receivable and payables of enterprises has risen sharply. From January to November 2011, the net amount of accounts receivable of member steel companies increased by 19.82% year-on-year, and the net amount of accounts payable increased by 23.86% year-on-year. "At present, the steel industry is only entering the early stage of the industry's cold winter. The environment facing the steel industry in 2012 will be more difficult." Zhu Jimin's speech is full of worries. According to his analysis, from the perspective of the international market, the overall economic development situation is unclear, and the industry may face multiple difficulties such as a decline in export volume, rising costs, and increased trade frictions. From the domestic situation, due to imbalances in economic development. The problems are still outstanding, and the impact of the slowdown in the growth rate of the steel industry, coupled with multiple factors such as cost increase, demand mitigation, financing difficulties, and high financing costs, is expected to face high cost and high inventory in 2012. Under the pressure of low selling prices, the industry's profits will still be at a low level, and the risk of small profits or losses for steel producers will further increase.
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