In the first three quarters of this year, the profits of Chinese steel enterprises declined significantly. This is due to the complex external environment, which leads to the rise of manufacturing costs, and the rapid release of production capacity.
Recently, the China Iron and Steel Industry Association held an information conference in Beijing for the third quarter of 2019. In the first three quarters of this year, China's steel production and demand have maintained a certain growth, but the profits have declined significantly. We need to be alert to the problem of "increasing production without increasing efficiency".
Since this year, steel production has increased significantly. From January to September, China's crude steel output was 748 million tons, up 8.4% year-on-year; pig iron output was 612 million tons, up 6.3% year-on-year; steel output (including repetitive materials) was 909 million tons, up 10.6% year-on-year.
At the same time, steel prices have declined. From January to September, China's steel price index (CSPI) composite index averaged 108.58 points, down 7.17 points or 6.2% year-on-year. Among them, the average value of long steel material index is 114.61 points, down 5.0% year on year, and that of steel plate index is 104.81 points, down 7.5% year on year.
The cost of steel manufacturing has increased significantly. Since this year, the prices of domestic iron concentrate, imported iron ore, scrap steel, coking coal and other major raw materials have generally increased, and they have continued to run at a high level. From January to September, compared with the same period last year, the purchase cost of main raw materials increased by 31.7% for imported iron ore, 21.5% for domestic iron concentrate and 8.8% for scrap steel.
The cost of iron and steel enterprises has increased by a large margin, and the manufacturing cost has increased by 8% to 10%, resulting in a year-on-year decline in the benefits of most iron and steel enterprises.
Next, the iron and steel industry should actively explore merger and reorganization while stabilizing production and increasing production, promote ultra-low emission transformation, control production pace, and walk out of the strange circle of "increasing production without increasing efficiency".
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