Nearly half of steel companies lose share price "singing tone"

Nearly half of the steel company's losses The stock price "sings a negative tone"

Since this year, 70% of steel stocks have outperformed the market from low valuations and favorable factors such as the concept of transformation reform. First-quarter results of listed steel companies have been released, with nearly half of steel companies making losses. However, different from the performance, iron and steel stocks can be described as a big player in the capital market in the near future. Although the sector turned green on Tuesday, Minmetals Development and other stocks were still at their daily limit. It is understood that since this year, more than 70% of steel stocks have outperformed the broader market. The steel plate is thus favored by most investors.

Of the listed companies in the steel industry, most of the companies achieved profitability in 2014, bringing a warm welcome to the cold winter of the industry. However, the losses of nearly half of the listed steel companies in the first quarter have once again thrown the industry into cold weather.

The reporter found that a total of 34 listed steel companies have issued a quarterly report. The 34 listed steel companies recorded a 18.37% year-on-year decrease in operating income in the first quarter, while net profit recorded a loss of 1.555 billion yuan, compared with a profit of 764 million yuan in the same period last year. Among them, a total of 16 steel enterprises announced losses, and 13 steel enterprises such as Chongqing Iron and Steel, Maanshan Iron and Steel Co., Ltd., Songshan Iron and Steel, and Bayi Iron and Steel suffered losses of more than 100 million yuan. As the steel company with the most serious losses in the first quarter, Chongqing Iron and Steel suffered a loss of 829 million yuan in the first quarter. Leading steel company Baosteel's operating income for the first quarter was 41.386 billion yuan, a year-on-year decrease of 11.47%. Angang’s operating income was 14.961 billion yuan, a year-on-year decline of 18.69%; net profit fell 93.36% to 19 million yuan, compared with net profit of 286 million yuan in the same period last year.

Analysts said that “after the price of iron ore fell below 50 US dollars, the decline in domestic steel prices for finished products was far greater than the decline in iron ore prices, and the profit of listed companies was directly affected.”

In fact, the decline in the performance of listed steel companies is only a microcosm of the industry-wide weakness. According to the latest statistics released by the China Iron and Steel Association, in the first quarter, large and medium-sized steel enterprises across the country achieved sales revenue of 762.918 billion yuan, a year-on-year decrease of 14.48%; overall, the total loss was 987 million yuan, but the main business suffered a total loss of 110.53 billion yuan, a loss of 34.33 yuan. 100 million yuan. There are 50 loss-making enterprises, accounting for 49.5% of the total number of statistical member enterprises.

Regarding the performance of the steel industry in the first quarter, Zhu Jimin, executive vice president of the China Iron and Steel Association, concluded that "demand fell, production fell, prices fell, environmental pressures increased, and overall losses occurred." Zhu Jimin stated that the western steel mills including Shanxi, Shaanxi, Guizhou, Yunnan, Xinjiang, Gansu, Sichuan and other regions are in the most difficult state to operate nationwide. “After a significant price reduction of imported ores, inland steel companies have moved from sea to coast. The cost of ore has increased dramatically."

According to statistics, there are currently 12 listed steel companies that have issued interim announcements, and there have been a total of 9 companies with losses and reductions. Chongqing Iron and Steel, Maanshan Iron and Steel Co., Ltd., Handan Songshan Iron and Steel Co. China Steel Association believes that steel demand in the downstream steel industry will hardly grow in the second quarter, and there may be a drop in demand.

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