Some steel companies that have been disclosed in recent days have seen a sharp decline in their first-quarter results, which has cast a shadow over the entire industry. Angang Steel (000898) expects net profit for the first quarter of this year to be about 71 million yuan, down 93.82% year-on-year, and earnings per share is about 0.01 yuan, mainly due to the sharp rise in raw material prices. Valin Steel (000932) announced that the company expects to lose 180 million yuan to 200 million yuan in the first quarter. The extrusion of raw material costs, the continued high production capacity and the instability of the steel price itself are the main factors that constrain the current steel mill's performance growth. The monthly price of iron ore has reached a new high. At present, the current situation of the weak fundamentals of the steel industry is still difficult to achieve substantial improvement. The outstanding performance of raw material costs, especially the cost of imported iron ore, has severely squeezed the profit margin of the steel industry. The data shows that the average import price of iron ore customs in March was 160.85 US dollars / ton, which has been rising for 4 consecutive months and hit a record high. From the corresponding spot price, the 63% Indian spot price of Indian mines fell from the high of 196 US dollars/ton on February 21 at the beginning of the year to the lowest point of US$170/ton on March 15. Then it continued to rebound to the current $188/ton, and the rebound strength in the month exceeded 10%. Imported ore prices continue to be high, but it is difficult to weaken the import enthusiasm of domestic steel mills. In the first quarter of this year, China imported 177.17 million tons of iron ore, an increase of 14.4% year-on-year. Among them, the import volume in March was 51.48 million tons, a significant increase of 10.68 million tons from February. Corresponding to the high import level, there is also the iron ore port inventory level. As of April 15, the domestic iron ore port inventory reached 83.25 million tons, an increase of 18.75% year-on-year, the highest level in the past years. According to the recent development of the steel industry in the first quarter, the National Development and Reform Commission said that the price of steel products fluctuated in the first quarter. The high raw material prices have severely squeezed the profit margins of steel companies, and the profit margin of key steel companies is only about 3%. In order to reduce the cost pressure, some steel companies have stopped importing iron ore spot. This year's crude steel output may reach 700 million tons. In addition to the high price and quantity of imported iron ore, the continued high crude steel output is also the ill of the steel market. Statistics from the National Bureau of Statistics show that from January to March, the country produced a total of 173.5 million tons of crude steel, an increase of 9.8% year-on-year, with an average daily output of 1,927,800 tons, the highest level in the same period. According to Sheng Zhicheng, deputy secretary-general of the Steel Affairs Committee of the China Federation of Logistics and Purchasing, according to the daily output from January to March, the crude steel output this year will reach 700 million tons, much higher than the 626.7 million tons in 2010. Higher than the government's estimate of China's crude steel output in 2011. In the first half of April, the daily average crude steel output of the key steel enterprises of the China Steel Association was more than 1.97 million tons, which was constantly refreshing. After this wave of peak demand season this spring, such huge crude steel production in China will become the first factor driving the downward price of steel. In addition, the volume of domestic steel market has been repeated this spring, which is obviously weaker than the same period of the past two years. Behind the high cost and output, domestic large steel mills have always operated at a low profit, and affected by the sharp fall in steel prices after the year, first-line steel mills are also facing greater pressure to make up. In April this year, WISCO, Anshan Iron and Steel, Benxi Steel, Shougang and other steel mills lowered their ex-factory prices for the first time or increased the preferential margin for sellers. Analyst Liu Qiuping believes that the current substantive contradiction in the steel industry has not yet been resolved. Under the background that the fundamentals have not yet improved substantially, the volatility of the market is only difficult to sustain due to the seasonal warming of demand. In the latter stage, the steel market is still likely to bottom out again, and the steel industry will continue to move forward. Liu Qiuping believes that from the current inversion space of steel mill prices and market prices, the first-tier steel mills will continue to pressure to fill the decline, which will continue to reduce the profit level of the steel mills later.
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