As of August 30, the semi annual reports of 52 listed companies in the steel industry in 2022 have been disclosed. Under the dual pressure of the prevention and control of COVID-19 and the severe situation of the steel market, the steel industry has entered a weak cycle, showing a trend of high costs, weak demand and declining profits. The operating efficiency of domestic steel enterprises has generally declined significantly year-on-year. According to the data of Oriental Fortune choice, among the above 52 listed companies, nearly 50% of the company's operating income decreased year-on-year, and more than 80% of the company's net profit attributable to the parent decreased year-on-year.
In the first half of the year, most steel enterprises overcame multiple pressures and challenges and made positive contributions to the overall stability of the upstream and downstream industrial chain. In the second half of the year, with the improvement of the epidemic situation, the supply of raw materials such as iron ore, coal coke and scrap steel will gradually improve marginally, the cost pressure of steel enterprises will gradually ease, and the profit center of steel enterprises is still expected to recover.
The performance of most steel enterprises is poor
According to the data of the National Bureau of statistics, in the first half of 2022, the ferrous metal smelting and rolling processing industry realized an operating income of 4575.97 billion yuan, a year-on-year decrease of 3.6%; The operating cost was 4332.65 billion yuan, a year-on-year increase of 0.7%; The total profit was 82.61 billion yuan, a year-on-year decrease of 68.7%. In terms of products, in the first half of 2022, the output of pig iron and crude steel in China will be 438.927 million tons and 526.877 million tons respectively, down 4.7% and 6.5% year-on-year respectively. In the first half of 2022, China exported 33.46 million tons of steel, a year-on-year decrease of 10.5%; A total of 5.77 million tons of steel were imported, a year-on-year decrease of 21.5%.
In the first half of 2022, the above 52 companies realized a total operating income of 1.23 trillion yuan, a decrease of 0.19% over the same period last year; The net profit attributable to the parent company was 39.623 billion yuan, down 51.46% from 81.623 billion yuan last year. 7 companies including Liugang, Anyang Iron and steel, Xining Special Steel and Bayi Iron and steel have net profit loss attributable to the parent. Among them, the net profit attributable to the parent of Xining Special Steel decreased by 329.59% year on year; The net profit attributable to the parent of Anyang Iron and Steel Co., Ltd., Liugang Co., Ltd., Daye Co., Ltd., Bayi Iron and Steel Co., Ltd. and Jiuquan Hongxing Steel Co., Ltd. decreased by more than 100% year on year.
As a leader in the iron and steel industry, Baosteel achieved an operating income of 183.655 billion yuan in the first half of the year, a slight increase of 0.2% year-on-year; The net profit attributable to the parent company was 7.791 billion yuan, a year-on-year decrease of 48.4%. "Affected by the COVID-19 epidemic, the demand of steel downstream industries such as automobiles and construction machinery generally declined in the first half of the year. Since the second quarter, the steel price has declined, the prices of raw and auxiliary materials such as coal and alloy in the upstream have remained high, the price difference between purchase and sales of steel enterprises has narrowed, and the business efficiency of the industry has dropped significantly." Baosteel said.
"The poor performance of domestic steel enterprises in the first half of the year is mainly due to the sharp drop in the profit of finished steel products caused by the imbalance between supply and demand." In an interview with the Securities Daily, Wang xuanyue, a researcher of the steel business group of Shanghai Steel Union, said that the overall demand for steel this year has decreased considerably. Although the domestic steel production has also decreased in the same period, the supply reduction rate is slower than the demand contraction rate. Under the situation of supply exceeding demand, the profit per ton of steel has gradually decreased.
"In the case of falling steel prices, the profit space gained by steel enterprises is greatly reduced, which directly affects the performance level of steel enterprises." Ye Yindan, a researcher at the Bank of China Research Institute, said.
The performance in the second half of the year is expected to recover
Due to the industry downturn, most of the steel enterprises have poor performance, but some companies offset the losses caused by the market downturn by relying on double or multiple main industries. For example, Yongxing materials realized a net profit attributable to the parent company of 2.263 billion yuan in the first half of the year, with a year-on-year increase of 647.64%. Yongxing materials said that the company has deeply implemented the dual main business development strategy of "lithium new energy + special steel new materials", and its profitability has been greatly improved and its performance has reached a new level. Although the net profit attributable to the parent of the company's special steel new materials business decreased year on year, thanks to the good prosperity of lithium battery new energy business in the first half of the year, the profitability was significantly improved, which was the main source of the company's net profit in the half year. In addition, Ordos has also widely distributed clothing, electric power, metallurgy and chemical industry. Under the overall depression of the steel industry, its performance has maintained high-speed growth.
According to the classification of the steel industry, listed steel enterprises are generally divided into three categories: general steel enterprises, special steel enterprises and metallurgical steel raw material enterprises. The reporter of Securities Daily found that the performance of special steel production enterprises in the first half of the year was generally better than that of other types of enterprises. Changbao Co., Ltd. is mainly engaged in the R & D, production and sales of special pipes such as oil and gas development pipes, power station boiler pipes, engineering machinery and petrochemical pipes and pipes for other market segments. In the first half of this year, the company realized a net profit attributable to the parent of 180 million yuan, an increase of 83.43% year on year. The company said that in the first half of the year, the capacity of new projects was released and the market demand of the oil and gas industry recovered. The production and sales of the company maintained growth and the profitability of products was improved. In addition, Shengde Xintai and Jiuli special materials and other steel enterprises also realized positive growth in net profit attributable to the parent company.
"At present, there are phased difficulties in the production and operation of the iron and steel industry. Enterprises should start from the supply side, adapt to the changes in the current demand situation, restore the dynamic balance of supply and demand through self-discipline, stabilize reasonable prices, and improve development efficiency." Ye Yindan suggested that first, we should focus on the development of quality and efficiency, and strictly implement the capacity replacement policy; Second, we will take the initiative to control the pace of production to get out of short-term difficulties, adhere to the "three no" industry bottom line of "no production without orders, no sales without profits, no payment and no delivery", and avoid falling into the mire of vicious competition; The third is to solve the transformation problem by adjusting the product structure, promoting the upgrading of process equipment and the digitization, networking and intellectualization of the iron and steel industry chain.
Wang xuanyue said that at present, the domestic steel market is at an important turning point in the development of the industry. Facing the current situation of the industry with limited demand and sufficient production capacity, the first priority for domestic steel enterprises is to seek stable survival at the turning point, and strive to achieve the goals of cost reduction and efficiency increase, product structure adjustment, environmental protection and technological improvement; Listed steel enterprises with strong strength also need to be forward-looking. Business actions such as mergers and acquisitions should clearly point to high-quality assets and product lines with good prospects, consolidate their own strength and explore overseas markets.
"Although the economic benefits of the steel industry declined significantly in the first half of the year, the overall asset status of the industry is still at a historically good level. The asset liability ratio of enterprises has decreased year-on-year, and the debt structure has been continuously optimized. With the implementation of self-discipline production reduction and output reduction policies, the industry's profitability will improve. It is expected that the performance of steel enterprises in the second half of the year will recover." Ye Yindan said.
