Major decline in listed steel companies in 2011 (Chart)

The slowdown in the growth of major steel and consumer households such as automobiles and real estate has hit hardly the major domestic steel companies. In light of the announced performance announcements, the performance of the steel industry in 2011 was bleak. Many listed steel companies issued notices that in 2011 there may be a substantial drop in profits or a large area loss. Yesterday's notice from domestic steel company Angang Steel made the market even more disillusioned. There were more than 200 million surplus Anshan Iron and Steel's annual report in the third quarter. The huge loss of 100 million yuan, the same dilemma still haunts Songshan Iron and Steel Company, the performance of this steel company also turned bad in the fourth quarter of last year.

Iron and steel companies are sad

Yesterday, Anshan Iron & Steel Co., Ltd. announced in its performance forecast that net profit loss attributable to shareholders of listed companies in 2011 was approximately 2.151 billion yuan, and the basic loss per share was approximately 0.297 yuan. According to statistics, the net profit of Angang Steel in 2010 was 1.704 billion yuan.

At the same time, the listed steel companies of Maanshan Iron & Steel Co., Ltd., Xingang Steel Co., Ltd., Nanjing Iron & Steel Co., Ltd. and Handan Iron and Steel Co., Ltd. also announced performance announcements. Maanshan Iron & Steel Co., Ltd., Xingang Steel Co., Ltd., and Nanjing Iron & Steel Co., Ltd. all forecast that their 2011 net profit will decline by more than 50% year-on-year. The Songshan Iron and Steel is expected to have a loss of approximately 1.17 billion yuan in 2011 (net profit was 20.94 million yuan in the same period last year), and the basic loss per share was 0.7008 yuan, a year-on-year drop of 5686%.

According to statistics from Ju Ling Finance, as of January 31, 15 listed steel companies have issued performance forecasts or express reports, of which nine steel companies have reduced or pre-losed. At present, the largest loss is for Anshan Iron and Steel Co., Ltd., and the most deteriorating performance is the Songshan Iron and Steel Co., Ltd.

Iron ore devours steel company profits

The high raw material prices and the sluggish steel prices since the second half of last year have become an important factor affecting many steel companies. A number of steel companies such as Angang, Xingang, and Guangzhou Steel all stated in their performance forecast that the increase in raw fuel prices in 2011 was higher than the increase in steel prices, especially in the fourth quarter of last year, but the prices of major raw materials were still operating at high levels, making Steel companies fell into a loss situation. “The decline in the performance of Angang and other steel companies may also be related to their cost pricing.” Analysts in the industry pointed out that the pricing principle of Anshan Iron & Steel's purchase of iron ore is based on the average customs price of China's iron ore imports in the first half of the year. Under this pricing model, when the price of iron ore is in the rising channel, Anshan Iron and Steel Co., Ltd. can purchase iron ore that is lower than the market price; but when the price of iron ore is in the descending channel, Anshan Iron and Steel will purchase iron ore at a high price. In the fourth quarter of 2011, the price of iron ore dived, but the purchase price of Angang Steel was still high, while the price of steel continued to fall.

The latest statistical data released by the China Iron and Steel Association shows that in 2011, the average CIF price of China's imported iron ore was US$163.84/ton, a year-on-year increase of 28.13%; during the same period, the average price of domestic iron ore concentrates rose by 15.06%. In 2011, the average price index of CSPI steel in China Steel Association rose by only 10.13%, which was significantly lower than the increase in iron ore price. According to the statistics of the China Iron and Steel Association, in 2011, large and medium-sized iron and steel enterprises realized a profit of 87.53 billion yuan, a decrease of 4.51% year-on-year; sales margin was only 2.42%, a year-on-year decrease of 0.59 percentage points. Compared with the low price of the steel market, the current iron ore price level is still high.

The loss mainly comes from the fourth quarter

It is noteworthy that most of the major losses of iron and steel enterprises came from the fourth quarter, such as Anshan Iron and Steel shares, the first three quarters of last year also made a profit of 239 million yuan, but the annual report forecast has exploded a huge loss of 2.151 billion yuan. Songshan Iron and Steel Co., Ltd. also encountered the same situation. In the first three quarters of last year, the steel company had more than 20 million yuan profit, but the annual report also suffered a loss. According to industry sources, in the fourth quarter, the sharp decline in steel companies' performance was closely related to the deterioration of the market environment. Data from the China Iron and Steel Association showed that in October and November 2011, its member steel companies realized profits of only 1.4 billion yuan and 1.22 billion yuan. The profit rate was 0.48% and 0.43%, respectively, and the company's loss was more than one-third. If the investment income was deducted in November, it was a net loss of 920 million yuan.

According to analysts from Guosen Securities, the current price of raw materials in the upstream of the steel industry is still at a high level, the concentration of mid-stream industries has not increased, steel inventories have not decreased, and the industries of downstream real estate machinery, appliances, and automobiles have not seen any significant improvement. As a whole, the steel industry still does not have The basis for continued improvement in performance. "After the stock price has fallen sharply, the current valuation of the steel industry has almost reflected pessimistic expectations. The industry's PB and industry indexes are all at the bottom of history." Orient Securities analysts suggest that configurable valuations have a margin of safety and products Advantages and advantages of ore resources in steel stocks.