In 2021, the average price of iron and steel rose sharply, and the efficiency of the iron and steel industry reached an all-time high. Listed steel enterprises have handed over bright transcripts.
On April 19, Gansu Jiu Steel Group Hongxing Iron And Steel Co.Ltd(600307) disclosed that the annual report of 2021 showed that the company achieved an operating revenue of 48.668 billion yuan during the reporting period, with a year-on-year increase of 31.46%; The net profit attributable to shareholders of listed companies was 1.488 billion yuan, a year-on-year increase of 187.31%.
Not only Gansu Jiu Steel Group Hongxing Iron And Steel Co.Ltd(600307) , according to the statistics of China stock market news choice, as of April 20, 26 listed steel enterprises have disclosed annual reports or performance letters. Among them, the net profit of 24 steel enterprises increased positively and 10 doubled.
Although the performance of iron and steel enterprises is satisfactory, in 2022, on the one hand, the prices of raw materials such as iron ore are still rising, suppressing the profits of the industry; On the other hand, the national development and Reform Commission announced on April 19 that it would continue to reduce the national crude steel output this year, and the reduction at the supply side would be beneficial to the industry.
However, many analysts believe that under the background of supply side reduction and market demand recovery, the suppression of raw materials on industry profits is expected to gradually ease, and the profits of steel enterprises will also gradually rise.
net profit of 10 steel enterprises doubled last year
According to the data of the Ministry of industry and information technology, in 2021, the cumulative operating revenue of key large and medium-sized iron and steel enterprises was 6.93 trillion yuan, a year-on-year increase of 32.7%; The total accumulated profit was 352.4 billion yuan, a year-on-year increase of 59.7%, a record high; The sales profit margin reached 5.08%, 0.85 percentage points higher than that in 2020.
A number of steel enterprises said in their annual reports that in 2021, the steel market improved and the sales price of steel increased year-on-year.
In terms of the growth rate of net profit, Inner Mongolia Baotou Steel Union Co.Ltd(600010) , Bengang Steel Plates Co.Ltd(000761) , Beijing Shougang Co.Ltd(000959) ranked among the top three Inner Mongolia Baotou Steel Union Co.Ltd(600010) 2021, the net profit attributable to shareholders of listed companies was 2.866 billion yuan, with a year-on-year increase of 606.09% Bengang Steel Plates Co.Ltd(000761) 2021: the net profit attributable to shareholders of listed companies was 2.501 billion yuan, with a year-on-year increase of 550.77% Beijing Shougang Co.Ltd(000959) 2021: the net profit attributable to shareholders of listed companies was 7.024 billion yuan, with a year-on-year increase of 293.19%.
According to the monitoring data of Lange steel cloud business platform, in 2021, the average value of Lange Steel’s national comprehensive steel price index was 5449 yuan / ton, up 35.2% year-on-year, and the middle line of the price exceeded that in 2008. In addition, the gross profit per ton of steel has also increased significantly. In 2021, the gross profit per ton of grade III rebar and hot rolled coil steel was 383 yuan / ton and 536 yuan / ton respectively, an increase of 139 yuan / ton and 346 yuan / ton respectively over the same period of last year, an increase of 57.0% and 185.1% respectively.
“The sharp rise in steel prices and the significant increase in the profit per ton of steel have driven the significant growth in the profit of the whole steel industry, surpassing 2018 to a new record high.” Wang Guoqing, director of Lange Iron and Steel Research Center, told the Securities Daily.
steel enterprises’ production profit is compressed
Behind the bright performance, most steel enterprises are still affected by the price rise of raw materials such as iron ore and coke, and the profit space is compressed.
According to the calculation data of Lange Iron and Steel Research Center, in 2021, the average pig iron cost index was 167.4, an increase of 45.2% year-on-year; The taxable production costs of grade III deformed steel bar and hot rolled coil steel per ton were 4480 yuan / ton and 4665 yuan / ton respectively, an increase of 1075 yuan / ton and 1131 yuan / ton respectively over the same period of last year, an increase of 35.7% and 36.2% respectively.
“Driven by the rise in raw material prices, the production cost per ton of steel in iron and steel enterprises has increased significantly.” Wang Guoqing said.
the performance express disclosed by Jiang Su Wujin Stainless Steel Pipe Group Co.Ltd(603878) shows that the company achieved a net profit of 175 million yuan attributable to shareholders of Listed Companies in 2021, a year-on-year decrease of 20.71%. For the reasons for the decline in performance, he said that due to the rise in the price of raw materials and the fierce competition in the Chinese market, the product sales price of mechanical equipment, power equipment and other industries decreased, and the profit space was compressed, resulting in the decline in performance.
In 2022, the prices of raw materials such as iron ore continued to rise, and the current situation of “high cost and low profit” still exists. “Since this year, the price of raw materials in China’s steel market has been maintained at a high position, among which the market price of imported iron ore and coke is strong.” Ge Xin, a researcher at Lange Iron and Steel Research Center, told the Securities Daily.
In terms of iron ore, Platts’ iron ore price index rose from 119.5 US dollars / ton at the beginning of the year to 149.9 US dollars / ton at present, an increase of 25.4%.
In terms of coke, in April, the blast furnace gradually resumed production, and the supply and demand of coke changed to tight. At present, it has increased by 1000 yuan / ton in five rounds.
Long Jiaxin, deputy manager of Xuyang marketing department, believes that there is still room for coke supply and demand to rise. It is expected that there may be a sixth round of increase plan in the middle and late April, but it will also be carried out at a selected time according to the repair of steel plant profits.
steel enterprises need to transform to high-end
On April 19, the national development and Reform Commission said that this year, it would continue to reduce the national crude steel output, guide iron and steel enterprises to abandon the extensive development mode of winning by quantity and promote the high-quality development of the iron and steel industry.
In the context of supply side reduction, can the current situation of “high cost and low profit” of steel enterprises be improved?
Ge Xin told reporters: “The requirements put forward by the national development and Reform Commission show that the state will adjust the iron and steel industrial structure and embark on the development road from ‘extensive’ to ‘fine’. Reducing the output of crude steel is only a means, but its ultimate purpose is to optimize and adjust the product structure of iron and steel production enterprises with the changes of downstream demand, and the profits of steel enterprises will gradually increase with the increase of high value-added product lines.”
“The continuation of the reduction of crude steel output will restrain the demand for raw materials, help the raw material price return to rationality, lower the cost of steel enterprises and improve the profit space.” Wang Guoqing thinks.
In the second quarter, steel demand will gradually pick up. Chen Kexin, chief analyst of Lange Iron and steel Economic Research Center, told reporters: “with the increase of steady growth measures, it is expected that the national steel demand situation in the second half of the year is higher than that in the first half of the year.”
A brokerage analyst told the Securities Daily: “the recovery of demand and the continuation of the policy of ensuring the supply and price stability of bulk commodities are expected to return to a reasonable range in the later stage, and the profits of steel mills will gradually rise.”
In addition, in order to get rid of the current situation of “high cost and low profit”, enterprises need to change from themselves. “Steel enterprises need to continuously dig deep in the product structure, strengthen the independent guarantee ability of raw materials in the industrial chain, and continue to innovate in smelting technology, so as to completely get rid of the strange circle of ‘increasing production without increasing income, increasing income without increasing efficiency’.” Ge Xin said.
