Steel Industry

(1) The output reached an all-time high. From January to June 2013, China produced 390 million tons of crude steel, a year-on-year increase of 7.4%, an increase of 5.6 percentage points over the same period a year ago. In the first six months, the average daily output of crude steel was 2.154 million tons, equivalent to the annual output of 786 million tons of crude steel. Among them, it reached a record high of 2.208 million tons in February. Although it fell from March to June, it remained at a high level of more than 2.1 million tons. In terms of provinces and regions, from January to June, the crude steel output of Hebei and Jiangsu increased by 6.8% and 13.2% respectively year-on-year. The total new output of the two provinces accounted for 42.4% of the national increment of 26.94 million tons. In addition, the output of Shanxi, Liaoning, Henan, and Yunnan also increased by more than 1 million tons. In terms of enterprise types, from January to June, the crude steel output of key large and medium-sized iron and steel enterprises increased by 5.5% year-on-year, 2 percentage points lower than the national average growth rate, but 60% of the increase still came from key large and medium-sized iron and steel enterprises.

(2) Steel prices are running low. From January to June 2013, the overall performance of the domestic steel market was sluggish. With the substantial release of crude steel production capacity, the market supply and demand fell into an imbalance, and the steel price entered a downward channel, which has been weak for more than 4 months. As of July 26, 2013, the steel price index had dropped to 100.48 points, lower than 6.6 points at the beginning of the year. The prices of the eight steel varieties mainly counted by the iron and Steel Industry Association decreased to varying degrees compared with the beginning of the year, with an average decrease of 5.7%. In terms of varieties, the prices of construction wire rods and rebar, which account for a large proportion of China’s steel output, fell by 4.9% and 6.7% respectively, and the prices of medium and heavy plate and hot-rolled coil fell by 5.7% and 9.7% respectively.

(3) Steel exports grew rapidly. The imbalance between supply and demand in the domestic steel market stimulates the export of enterprises. From January to June, China exported 30.69 million tons of steel, a year-on-year increase of 12.6%; 6.83 million tons of steel were imported, down 1.8%, and 320000 tons of billets and ingots were imported, up 50%. Converting billets into crude steel, the cumulative net export was 25.06 million tons, a year-on-year increase of 17.3%, accounting for 6.4% of China’s crude steel output. In terms of export price, the average price of exported rods and wires from January to June was 624.3 US dollars/ton, a year-on-year decrease of 18%; Sheet metal was 835.2 US dollars/ton, a year-on-year decrease of 2.8%.

(4) Steel plant and social inventory are running at a high level. The contradiction between market supply and demand spread to the circulation field, and the domestic steel inventory continued the growth trend at the end of last year. On March 15, it reached an all-time high of 22.52 million tons, an increase of 3.51 million tons over the highest point of the previous year, including 14.32 million tons of construction steel inventory, accounting for 63.6% of the total inventory. After that, with the increase of seasonal consumption, the inventory gradually fell back to 15.4 million tons on July 26. The oversupply in the market also pushed up the inventory of steel mills. In mid-March, the steel inventory of key enterprises hit a record, reaching 14.51 million tons, a year-on-year increase of 29.7%, and decreased to 12.68 million tons in late June, still an increase of 29.9% over the beginning of the year and 11.4% over the same period in 2012.

(5) The profitability of steel mills declined month by month. In the first half of 2013, the metallurgical industry realized a profit of 73.69 billion yuan, a year-on-year increase of 13.7%, of which the ferrous metal smelting and rolling processing industry realized a profit of 45.44 billion yuan, a year-on-year increase of 22.7%. From January to May, the profitability of key large and medium-sized iron and steel enterprises was far lower than the overall level of the industry and showed a downward trend month by month. Although the profit increased by 34%, it was only 2.8 billion yuan, and the sales profit margin was 0.19%. In May, 86 key large and medium-sized iron and steel enterprises realized a profit of only 150 million yuan, falling month on month for five consecutive months, of which 34 suffered losses, with a loss surface of 40%.

(6) The growth rate of fixed-asset investment in the iron and steel industry decreased significantly. From January to June 2013, the fixed asset investment in the iron and steel industry was 303.5 billion yuan, with a year-on-year increase of 4.3%, of which the investment in ferrous metal smelting and rolling was 235.6 billion yuan, with a year-on-year increase of 3.3%, down 6.1 percentage points from the same period in 2012; The investment in ferrous metal mining and the dressing was 67.9 billion yuan, a year-on-year increase of 7.8%, and the growth rate fell sharply by 15 percentage points.