In 2020, after the outbreak of covid-19 pneumonia, the overall revenue and net profit of Listed Companies in the steel industry were affected. However, since the fourth quarter of 2020, the performance began to rebound strongly; By 2021, benefiting from the strong market demand, the steel price has risen sharply, the revenue and net profit of Listed Companies in the steel industry have increased significantly, and the industry has entered the most prosperous period in the past decade.
As of March 21, according to the statistics of the reporter of the daily economic news, the announcement of 32 listed companies in the steel industry in Shanghai and Shenzhen that have disclosed their performance in 2021 found that the net profits of 27 steel enterprises have achieved positive growth, of which 13 have doubled their net profits. In terms of profitability, Shanxi Taigang Stainless Steel Co.Ltd(000825) , Beijing Shougang Co.Ltd(000959) and other steel enterprises have achieved record high performance Baoshan Iron & Steel Co.Ltd(600019) it is estimated that the net profit attributable to the parent company will be about 23.58 billion yuan to 23.98 billion yuan in 2021, becoming the most profitable steel enterprise in a shares.
It is worth noting that although the steel industry made gratifying profits last year, the industry is also facing a severe test under the “double carbon” goal. Under the background of “double carbon”, how can iron and steel enterprises seize the opportunity in the future development? How to realize green development? How to promote mergers and acquisitions in the industry? Will be related to whether iron and steel enterprises can take the lead in future development.
several listed steel enterprises achieved record performance
Although China’s crude steel production decreased in 2021, steel enterprises still achieved remarkable results. In terms of profitability, Baoshan Iron & Steel Co.Ltd(600019) , Shanxi Taigang Stainless Steel Co.Ltd(000825) , Beijing Shougang Co.Ltd(000959) , Bengang Steel Plates Co.Ltd(000761) and other steel enterprises said that 2021 was the best year for the steel industry.
Beijing Shougang Co.Ltd(000959) released the performance express, the total operating revenue in 2021 was 133398 billion yuan, an increase of 66.85% over the same period of the previous year; The net profit attributable to the shareholders of the listed company was 7.024 billion yuan, with a year-on-year increase of 293.19%, which is the best performance of Beijing Shougang Co.Ltd(000959) since the listing of A-Shares in 1999.
Shanxi Taigang Stainless Steel Co.Ltd(000825) performance Express reported that the total profit in 2021 was 6.847 billion yuan, an increase of 295.91% over the previous year, and the operating performance reached the best level in history. The company said that last year was mainly affected by the macroeconomic recovery, the demand of downstream industries of steel products increased and steel prices rose; At the same time, the company adheres to the standard to find the difference, the production efficiency is greatly improved, the technical and economic indicators of key processes are significantly improved, the cost reduction effect is remarkable, and the business performance is significantly higher than that of the previous year.
Baoshan Iron & Steel Co.Ltd(600019) has become the most profitable steel enterprise in a shares, with the highest total expected net profit. According to the performance pre increase announcement, the net profit attributable to the parent company is expected to increase by 10.9 billion yuan to 11.3 billion yuan in 2021, an increase of 86% to 89% year-on-year. In 2020, the net profit attributable to shareholders of listed companies was 12.68 billion yuan. Based on this calculation, Baoshan Iron & Steel Co.Ltd(600019) it is estimated that the net profit attributable to the parent company will be about 23.58 billion yuan to 23.98 billion yuan in 2021.
For the reasons for the pre increase in performance, Baoshan Iron & Steel Co.Ltd(600019) explained that in 2021, thanks to the continuous implementation of measures to promote economic recovery after the epidemic, the global economic recovery, the compensatory growth of international market demand and the sharp rise in steel prices and bulk commodity prices. However, since the fourth quarter of 2021, the price of steel products has fallen sharply, while the prices of upstream coking coal, alloy and energy medium are generally high, and the price of raw fuel is in the process of reconstruction. Affected by the rise of raw and auxiliary materials and energy prices exceeding the decline of iron ore prices, the overall cost pressure of the company is expected to increase in the fourth quarter.
In addition, from the growth rate, the net profit of four steel enterprises increased by 3 ~ 8 times year-on-year Bengang Steel Plates Co.Ltd(000761) , Inner Mongolia Baotou Steel Union Co.Ltd(600010) 2 companies’ lower limit of net profit advance exceeds 500%. Among them, Bengang Steel Plates Co.Ltd(000761) it is estimated that the net profit attributable to the parent company will reach 2.781 billion yuan in 2021, an increase of 624% over the same period of last year Inner Mongolia Baotou Steel Union Co.Ltd(600010) it is estimated that the net profit in 2021 will be 2.44 billion yuan to 3.65 billion yuan, with a year-on-year increase of 501.05% to 799.11%. In addition, Hainan Mining Co.Ltd(601969) it is estimated that the net profit attributable to the parent company will reach 801 million yuan to 960 million yuan in 2021, with a year-on-year increase of 461.70% to 573.66% Anyang Iron & Steel Inc(600569) it is estimated that the net profit attributable to the parent company will be RMB 900 million to RMB 1.2 billion in 2021, with a year-on-year increase of 294.01% to 425.35%.
“Although the steel industry’s profit rose significantly year-on-year in 2021, it led to a significant increase in the overall profit of the steel industry in 2018.” Wang Guoqing, director of Lange Iron and Steel Research Center, said.
According to the monitoring data of Lange steel cloud business platform, the average comprehensive price of Lange steel in 2021 was 5445 yuan, an increase of 1416 yuan or 35.12% over the previous year. In the same period, the calculation data of Lange Iron and Steel Research Center shows that in 2021, the tax included cost of seven varieties increased by 1026 yuan or 29.22% compared with the previous year. It can be seen that the price increase is higher than the cost increase, which expands the profit space.
can the high prosperity of steel sector be maintained
In 2022, can the excellent situation of the iron and steel industry continue?
Valin said on the interactive platform on March 15 that the production and operation of the company was normal in the first quarter and the order volume was relatively full.
Beijing Shougang Co.Ltd(000959) released the announcement of February production and operation express, which showed that in February, the production and sales of high-end cold-rolled automotive steel and pickled automotive steel such as aluminum silicon coating increased significantly, and the production and sales of high-end electrical steel products continued to increase Beijing Shougang Co.Ltd(000959) analysis shows that the demand of downstream industries is still recovering after the Spring Festival, and the current steel inventory level is low; Affected by the situation in Russia and Ukraine, the prices of international energy and steel have increased to a certain extent. It is expected that China’s steel prices will fluctuate strongly in the short term.
Pangang Group Vanadium Titanium & Resources Co.Ltd(000629) disclosed that in the first two months of this year, the company achieved a total operating revenue of about 2.6 billion yuan, an increase of 24% year-on-year; The net profit attributable to shareholders of listed companies was about 260 million yuan, a year-on-year increase of 122%.
Baoshan Iron & Steel Co.Ltd(600019) 3 on March 16, when receiving investors for investigation, he said that since this year, due to the impact of low-carbon, environmental protection, Russia Ukraine conflict and other factors, the costs of alloy, nonferrous metals and energy remain high, and it is expected to continue to operate at a high level in the future. The rise of these costs has not been paid attention to in the past, but has indeed significantly affected the profitability. On the one hand, iron and steel enterprises should tap the potential and reduce the cost internally. On the other hand, they should also fully communicate with the downstream, seek reasonable cost transmission, and strive for the rational distribution of profits in the upstream, middle and downstream of the industrial chain. Through in-depth communication with the same industry and downstream, a certain consensus has been reached.
Baoshan Iron & Steel Co.Ltd(600019) believes that the fourth quarter of 2021 is the trough of the industry. The situation in the first quarter of 2022 has improved month on month. It is expected to continue to improve in the second quarter, but the market is difficult to reach the height of the first half of 2021.
Generally speaking, the first half of 2021 is more demand driven, and the first half of this year is more cost driven.
Looking forward to 2022, the research report released by Everbright Securities Company Limited(601788) Wang Zhaohua’s team said that if the pressure output finally becomes the policy target of the steel industry in 2022, it will mean that it is expected to reverse the market’s expectation of the steel industry in 2022. If the probability of pressure production increases, the beta opportunity will reappear. Recently, the steel production reduction is expected to increase again, and the industry is expected to usher in beta opportunities again. At present, the valuation of ordinary steel sector is at the low level since 2013.
China International Capital Corporation Limited(601995) pointed out that the overall performance of the black series is still affected by the weak demand in China. Looking ahead, “we believe that the key to the trend of black series this year still lies in the recovery of China’s growth confidence”, so we need to pay special attention to the implementation of policies related to steady growth.
steel industry merger and reorganization accelerated
On February 7 this year, the Ministry of industry and information technology, the national development and Reform Commission and the Ministry of ecological environment issued the guiding opinions on promoting the high-quality development of the iron and steel industry (hereinafter referred to as the Guiding Opinions), proposing to promote the merger and reorganization of enterprises. Encourage industry leading enterprises to implement merger and reorganization and build several world-class super large iron and steel enterprise groups.
In the interview, some analysts said that looking forward to 2022, under the goal of “double carbon”, the iron and steel industry, as a high-energy consumption industry, is currently in the changing situation of industry restructuring. While focusing on the main industry, the iron and steel industry strives for steady progress by means of mergers and acquisitions, asset optimization, technology upgrading and focusing on high-end products.
The reporter noted that in 2021, China Baowu iron and Steel Group reorganized Shandong Iron And Steel Company Ltd(600022) Group Co., Ltd. and connected with Baotou Steel Anyang Iron & Steel Inc(600569) mixed reform will also be promoted; Anshan Iron and Steel Group restructured Benxi Iron and steel group. In addition, the trend of inter regional merger and reorganization of iron and steel enterprises will also be formed. Tangshan proposed that by 2025, the number of iron and steel enterprises in Tangshan will be controlled within 20, and merger and reorganization in the next three years will be the key direction of the development of Tangshan Iron and steel industry.
Will the acceleration of merger and reorganization of iron and steel enterprises promote the further improvement of industrial concentration?
“The merger and reorganization of the iron and steel industry is conducive to improving the degree of concentration, which is conducive to the optimization of the industry structure and the standardization of the market circulation order, the control of the total production capacity of the industry, and the reduction of carbon emissions through economies of scale.” Wang Guoqing analysis. Since this year, although the quantitative goal of industrial concentration in the merger and reorganization of the iron and steel industry is no longer emphasized, the merger and reorganization of the iron and steel industry will continue to be promoted. The iron and steel industry can enhance the endogenous driving force of enterprise development through merger and reorganization, and use synergy to promote the leapfrog development of enterprises after reorganization. The breakthroughs of large iron and steel enterprise groups in technology, environmental protection and low-carbon development can be promoted within the group. At the same time, synergies can be formed in procurement, sales and supply chain system, which is conducive to the overall energy conservation and emission reduction, cost reduction and efficiency increase of the iron and steel industry.
In fact, under the current momentum of policy guidance, the overall operation trend of the iron and steel industry in 2021 can be summarized as “reduction and quality improvement”.
Qi Haikun, President of Beijing Teyi sunshine new energy, analyzed and pointed out to reporters that China’s iron and steel industry is indeed “big but not strong”, which is closely related to China’s industrial structure. At present, the iron and steel industry is also changing from the previous “rapid development” to “high-quality development”. “This is not urgent. After all, cultivating and developing new technology products requires a process, that is, the process of product maturity, which is the process of enterprise growth and transformation. Only by following the objective law of enterprise development can we achieve mature and stable product iteration and enterprise from large to strong.”
All this takes time. Even capital investment has a marginal effect. It can not bring too much change immediately by burning money. This is the characteristic of technology driven manufacturing industry, and the steel industry is no exception. With the continuous upgrading and iteration of new products and technologies to a certain extent, a high-quality high-speed growth model is worth looking forward to.
Wang Guoqing believes that during this period, steel enterprises should accelerate the development and application of low-carbon smelting technology, carbon capture technology, new energy utilization and circular economy as soon as possible. Steel enterprises should also actively grasp the new opportunities under the development of green and low-carbon economy and win broader development space for enterprises through green and low-carbon transformation.
