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Demand is improving and supply contraction, 15 steel companies expect doubled net profit in the first quarter

Demand is improving and supply contraction, 15 steel companies expect doubled net profit in the first quarter

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[Abstract]:
Author: Xin Ya Xi Date: 2017-04-20 11:43:55 Tags: Industry News

Keywords: steel

The data shows that as of April 19, 15 companies in the steel industry have released first-quarter performance forecasts, and another has released a quarterly report, with the disclosure progressing close to 40%. The above-mentioned company's net profit increased by more than 100% year-on-year. Among them, Nangang has the largest increase, reaching 43.9 times; Hualing Steel, which lost money last year, turned losses in the first quarter. The good fundamentals of steel in the first quarter and the low base in the same period last year were important reasons for the sharp growth of the steel industry in the first quarter...

Author: Xin Ya Xi Date: 2017-04-20 11:43:55 Tags: Industry News

  

Keywords: steel

 

The data shows that as of April 19, 15 companies in the steel industry have released first-quarter performance forecasts, and another has released a quarterly report, with the disclosure progressing close to 40%. The above-mentioned company's net profit increased by more than 100% year-on-year. Among them, Nangang has the largest increase, reaching 43.9 times; Hualing Steel, which lost money last year, turned losses in the first quarter. The good fundamentals of steel in the first quarter and the low base in the same period last year were important reasons for the sharp growth of the steel industry in the first quarter.

 

Fundamental improvement

 

From the fundamentals of the industry, the prices of various types of steel in the first quarter continued to rise. In terms of raw materials, iron ore and coking coal coke prices are relatively stable. On the demand side, fixed asset investment and real estate investment were both at a high level in the first quarter, and downstream demand improved. In terms of policies, steel production capacity, elimination of intermediate frequency furnaces and rectification of strips have increased. Overall, the fundamentals of the industry continue to improve.

 

Among the 15 companies that issued performance forecasts, 9 companies are expected to turn losses, and 6 pre-increased, all pre-history. At the same time, the performance of the rapid growth, these companies expect the first quarter net profit growth rate at least doubled.

 

Among them, Nangang is ranked among the best in terms of net profit growth rate of 34.93-43.91 times. The company expects to achieve a net profit of 400 million yuan to 500 million yuan in the first quarter. Nangang said that since 2017, steel prices have remained at a relatively high level. At the same time, the company continued to optimize the “high-efficiency production, low-cost manufacturing” special steel system, and its profit increased significantly year-on-year. In addition, the net profit of Shagang, Sansteel Shuguang and Bengang Steel Plates increased by more than 500% year-on-year.

 

In addition to steel producers, the steel products industry is equally eye-catching. Xinxing Casting Pipe is expected to achieve a net profit of 195 million yuan - 24 million yuan in the first quarter, an increase of 399%-527%. The company said that with the increasing investment in pipe network and infrastructure construction in the first quarter, the industry situation has improved significantly, and the profitability of the company's core products has been greatly improved. The sales price and gross profit of the company's main products have increased significantly compared with the same period of last year. Profits have risen sharply.

 

From the performance of 2016, although the whole industry has achieved a turnaround, Valin Steel, *ST Heavy Steel, Shandong Steel and *ST Shanghai Branch are expected to have confirmed losses. However, Valin Steel's first-quarter results forecast shows that the company has achieved a turnaround, and it is expected to achieve a net profit of 250 million yuan to 350 million yuan in the first quarter. The company said that in the first quarter of 2017, the downstream demand recovered slightly. The state continued to promote structural reforms on the supply side, increased efforts to reduce production capacity of steel, eliminate intermediate frequency furnaces and rectify strip steel. Steel prices steadily climbed and the steel industry operated. As the situation improved, the company's operating conditions improved significantly.

 

First quarter or high performance

 

After the rapid rise in steel prices in the previous period, steel prices began to fall back in March. At the same time, driven by high profits, 163 steel mills eliminated the capacity utilization rate and climbed to 90.27%, a year-on-year increase to a new high since March. Crude steel production in March hit a record high, while demand in the peak season fell short of expectations. This has caused many steel companies to perform poorly in recent days despite good performance.

 

Insiders pointed out that from March 1 to April 14, steel prices fell significantly, and steel gross profit decreased by nearly 400 yuan / ton. Supply pressure has gradually increased. In the first quarter, domestic crude steel supply increased by 16.93 million tons, an increase of 10.2%. Excess supply will accumulate in inventory and steel prices will continue to be under pressure. It is expected that the first quarter results will be high, and the related companies' performance in the second to fourth quarter will decline.

 

Industry analysts believe that steel prices may continue to fall in the short term. After the steel price is continuously adjusted, the overall market will gradually return to equilibrium. As prices continue to fall, steel mills' profits narrow, reaching near the overall production costs of steel mills, and steel stocks are likely to rebound after some stocks have been digested. The time node may have to wait until the end of June, and after the ground steel is completely removed nationwide.