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Since the end of last year, the main commodity futures contracts such as screw steel, hot-rolled coil and so on have rebounded and risen sharply, and the current price has doubled compared with the end of last year.
How does the rise of the steel price affect the middle and lower reaches of the steel industry?
Steel prices doubled over the past six months, rising costs in the middle and lower reaches
Since the end of last year, prices of steel commodities have risen sharply. Among them, the main contract rebounded from the low of 1,618 yuan per ton set in early December last year, as of August 10, the price of rebar rose to 4,200 yuan per ton, up 159.6%; hot rolled coil also rebounded strongly from the low of 1,675 yuan per ton in early December last year, up 149% to 4,171 yuan per ton as of August 10; wire rod also rose. From 1698 yuan per ton to 4182 yuan, up 146.3%.
Recently, CCTV financial reporters visited a steel trading market in Jinshan, Shanghai, where steel traders reflect that the rise in steel prices has indeed increased their purchase costs, while the demand downstream is not strong, profit margins are squeezed.
Li Jianfeng, a steel trader in Shanghai, may be slightly less business than last year. Because our main customers are two aspects, on the one hand is the real estate company, do this piece of real estate; on the other hand is the entity of these manufacturers. Due to the industrial upgrading in Shanghai over the years, many manufacturers have also been relocated, resulting in a decline in business now. Real estate due to their repayment lag, their start-up situation is still better, the demand for materials is still very large, but they are now a little bit worse than the previous year's repayment.
Steel traders said that because the real economy was affected by the state's "deleveraging" policy in the first half of the year, the downstream manufacturers were generally tense of funds, which made the middle reaches of the steel traders also adopted a shortened account period and increased turnover strategy, so even if steel prices rose this year, steel traders were afraid to hoard goods aggressively to prevent the break of the capital chain. The problem.
Lu Ping, vice president of Daming International: Since last year, the rise in steel prices has really put a lot of pressure on us. Because we downstream users on the one hand hope that we can share some of the price increases brought about by the cost pressure, on the other hand, many of our downstream users are facing financing difficulties, high cost of capital and financial tension.
CCTV financial reporters for this also telephone interviews with the production of plate, long wood as the main business of listed steel companies Nangang shares.
Tang Rui, representative of stock and securities affairs of Nangang, said: The price of plate products has risen the most since the first half of this year. From January to June, the average market price of medium and heavy plates was 4,245 yuan / ton, compared with 3,456 yuan / ton in the same period of 2017, a rise of 789 yuan / ton, up 23%.
Tang Rui, representative of Nangang Stock Securities Affairs, said that from the point of view of raw materials for steelmaking, iron ore prices have been stable over the past six months, while scrap and coke prices have risen. Iron ore prices have been fluctuating at around $500 a tonne since June, while coke prices have climbed since March to an earlier high of $2,500 a tonne. The quotations for Tangshan and Zhangjiagang 6-8mm scrap steel have also risen from about 1,400 yuan per ton at the end of April 2007 to about 2,200 yuan to 2,300 yuan per ton.
Profits of listed steel companies improved significantly. The gross profit of medium and heavy plate reached 47%.
The rise of the steel price has brought many pressures to the middle and lower reaches of the enterprise, and the upstream steel enterprises have benefited a lot. The profits of steel listed companies this year have been quite impressive.
Since this year, the profitability of listed steel companies has been greatly improved. According to the data of this year's quarterly report, the net profit attributable to Hualing Iron and Steel Co., Liugang Co., and Songshan Iron and Steel Co., Ltd. grew by more than 400% year-on-year, while the net profit attributable to stainless steel, Wujin Stainless Steel Co., Baotou Iron and Steel Co., and Xingang Co., Ltd. increased by more than twice year-on-year, and the net profit of these companies after deduction of non-profit also increased by two to four times. The increase shows that profits mainly come from the steel products themselves.
In terms of gross margin, the top five listed steel companies in the first quarter were Fangda Special Steel 29.22%, Jiuli Special Materials 23.11%, Sangang Minguang 22.82%, Shagang 22.68% and Nangang 19.83%. Most of these companies are engaged in the production of high-value-added special steel and high-gross steel products such as medium and heavy plates.
Since the quarterly report did not disclose specific production data, according to the information disclosed in the annotations to last year's annual report, Fangda Special Steel produced 10.585 million tons of iron, steel, timber and automobile leaf springs last year, compared with its operating profit of 4.468 billion yuan in the steel industry last year, roughly calculating its average production per ton. Iron and steel products can earn a gross profit of 422 yuan. For example, Jiuli Special Material, its steel products are mainly seamless steel pipes and welded pipes. Based on the sales volume of these two pipes last year, we can calculate the profit of about 7 379.6 yuan per ton of steel pipes it sold last year. Thus, the contribution of different steel varieties to the profits of the steel works is different, while the product structure and production capacity are different. Marginal cost and sales volume are also important variables that affect the profits of listed steel companies.
However, from the perspective of the industry as a whole, such as screw steel, plate and other steel products, gross margin has increased significantly in the past year. Gross per ton steel rates, like those for rebars, have risen steadily from around 12-15% in early 2017 to close to 30% so far. The gross profit margin of hot-rolled coil was dropped to around 10% in March 2017, and now it has risen to around 26%. The gross margin of wire rod changed from negative to positive at the beginning of 2017, and has basically kept fluctuating at around 18% since then. The gross margin of medium and heavy plate is relatively high, which reached about 47% at one time in June 2017 and is now around 33%.
The average price earnings ratio of the steel industry dropped to 8 times from 13 times in the beginning of the year.
Since this year, the average price-earnings ratio of the steel industry has fallen from about 13 times at the beginning of the year to around 8 times at the beginning of July, and has risen to about 9 times in the last month. The five largest companies are Baosteel, Baotou Steel, Anshan Steel, Shagang and Tisco Stainless Steel. Among them, Baosteel has the largest market value of 191.281 billion yuan, which is the only listed steel enterprise with a market value of more than 100 billion yuan.
However, from the price earnings ratio, Baosteel is 9.61 times, and the industry's average price earnings ratio is almost the same. Excluding loss-making * ST Fujian Steel, the five companies with the lowest P/E ratios for the steel sector are Hualing Steel, Nangang, Anyang Steel, Taigang Stainless Steel and Ma Steel. Among them, Hualing Steel has a P/E ratio of less than five times, while the others are between five and six times.
In terms of the P/E trend, Valin Steel was still losing money at the beginning of 2017, with a P/E ratio of - 17 times, turning a profit in March last year, reaching a peak of about 15 times in September, then gradually falling to four times today. The shares of Nangang also dropped from 45 times earnings at the beginning of last year to about 5 times that of today. The other Steel Corp's P / E ratio is basically a sharp downward trend. However, from the quarter-to-quarter growth rate of deductible non-net profit, the five companies in the first quarter of this year's growth rate of deductible non-net profit is not high, including Nangang shares, Anyang Iron and Steel and stainless steel also declined, which may be due to the delayed start of the peak season this year, so that the report did not reflect profits in time.
Wang Hetao, chief analyst of the Yangtze Securities and Steel Industry, said: In the short term, the overall macro demand level is still in a relatively strong situation. For example, the price of steel has been rising. Inventory is at a relatively low historical low, which is a sign of strong short-term demand, so the market is now worried about the core of the medium-term and long-term problems. If we are still in a transitional, credit contraction situation, then the future economy will bear some pressure sooner or later, which is also the steel stocks have not been given too high valuation, or the market has been a major reason for doubt.
 

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