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What is the high output and low efficiency of the steel industry?
From January to September, the domestic cumulative production of crude steel was 527.735 million tons, up 10.7% year-on-year. The profit margin of key large and medium-sized steel enterprises was only 2.99%, and the profit margin was further narrowed. As of the third week of October, the domestic market steel prices have continued to decline. In the past three months, the price has fallen by more than 15%. China Iron and Steel Association expects that domestic steel companies are still in a low-efficiency state this year. The Steel Association also expects that domestic crude steel production will reach 700 million tons in 2011. The domestic steel market has a high output, the international iron ore prices are low, and the steel industry's main profit is extremely low. According to the Steel Association, the average sales profit rate of 77 key large and medium-sized steel companies is only 2.99%. Why is the profitability of steel companies still falling in the face of falling costs? The Iron and Steel Association believes that the contradiction of oversupply is the most important reason why enterprises can only be on the edge of capital preservation. The increase in production is still too fast. “Steel production growth is still too fast.†Zhang Changfu, secretary-general of the China Iron and Steel Association, said that from January to September, the domestic cumulative production of crude steel was 527.735 million tons, up 10.7% year-on-year, and the output of pig iron and steel products exceeded 10%. "If the average daily production of crude steel is 1,925,800 tons in the fourth quarter, the crude steel output will reach 700 million tons this year." Zhang Changfu said. The growth rate of fixed asset investment in the steel industry is also accelerating. According to the National Bureau of Statistics , from January to September, the cumulative investment in fixed assets of the steel industry was 371.7 billion yuan, a year-on-year increase of 19.7%, which was 15.5% faster than the same period last year. “A large part of this is non-state-owned SMEs.†Zhang Changfu said that due to the reduction of new construction projects of key large and medium-sized iron and steel enterprises, the investment of state-owned steel enterprises increased by 5.8% from January to August, while the investment of non-state-owned steel enterprises increased substantially. 39.3%, investment growth is faster than state-owned enterprises. From the perspective of the domestic market, the weakening of demand and tightening policies have slowed the growth of manufacturing industry. The overall demand for steel products has shown a downward trend, and the contradiction between supply and demand has intensified. The scale of production and sales in the machinery and automobile industries was much lower than that in the same period of last year. The orders for new ships in the shipbuilding industry dropped significantly to 42.8%. According to the latest short-term outlook forecast issued by the International Steel Association, global steel consumption will be lower than 2010 levels this year and next. High-priced port stocks and mines are under pressure. At present, the total iron ore stocks of the eight major domestic ports exceeds 98 million tons. The average CIF price of imported iron ore in China this year is US$165/ton, up by US$43/ton. "This high price is a huge pressure for steel mills and traders," said Zhang Changfu. According to customs statistics, domestic companies spent more than US$21.94 billion on foreign exchange due to rising import prices of iron ore in the first nine months. The China Iron and Steel Association said that the price of iron ore has risen sharply, and it has been unable to digest its substantially increased costs by reducing costs and increasing efficiency. The impact of the increase in the price of iron ore, coal, electricity and other resources and energy has made the steel industry still in a high-cost, low-profit operation. "This year, real estate, automobile, shipbuilding, home appliances and other industries are in a downturn, the cost of goods is also high, the risks are high, traders are afraid to rush, steel mills do not dare to buy, these are released to the industry Dangerous signal," said Zhuo Chuang Consulting Steel Industry analyst. The reduction of the steel industry adjust Recently, the State Council Development and Reform Commission approved the "consult regarding the development of the steel industry restructuring pilot project in Shandong Province", which reveals an important idea to adjust the national steel industry is the quantity adjustments. According to the "Requests" approved by the State Council, the main objectives of the pilot project of steel industry restructuring in Shandong Province are to compress and control the total amount, optimize the industrial layout and product structure, implement energy conservation and emission reduction, improve industrial concentration, and build a circular economy demonstration zone for the steel industry. And carbon emission assessment demonstration bases, etc. Zhang Changfu said that reducing total volume, improving quality, improving quality, and upgrading equipment are effective ways for domestic steel companies to increase profit margins. It is a disaster for the industry to produce low-grade steel products one by one. Repeating the construction of low- and medium-grade production lines is a disaster for the industry. The National Development and Reform Commission announced in the announcement on the 9th that Shandong is a large steel province and has formed a comprehensive steelmaking capacity of 63.07 million tons. The third place in the country. However, due to the long-term extensive development, Shandong iron and steel enterprises have low equipment levels, unreasonable industrial layout and product structure, weak market competitiveness, high pressure on energy conservation and emission reduction, and strict requirements for structural adjustment. The announcement also pointed out that Shandong Province has explored and solved the deep-seated problems in the development of the steel industry through pilot projects, and has a positive demonstration significance for the transformation and development of the steel industry in key steel-producing regions.