Zhang Xiaogang, President of China Iron and Steel Association and General Manager of Anshan Iron and Steel Co., Ltd. Judging the Trend of the Steel Industry Affected by the financial tsunami, China's steel industry is currently experiencing a general loss. Some steel companies have cut production or even stopped production. Recently, in an exclusive interview with this reporter, Zhang Xiaogang, president of the China Iron and Steel Association and general manager of Angang Group, revealed that the loss of domestic steel companies has rapidly expanded in October. Although the country has introduced relevant measures, the operating environment of the steel industry is still There is a lot of uncertainty, and the first half of next year will be critical to the steel industry.
"The impact of the financial tsunami on China's real economy has gradually begun to show itself. The current crisis is unprecedented, and the steel industry is one of the industries most affected and affected." Zhang Xiaogang told reporters that the situation facing the steel industry is very serious. Since August, the domestic steel market has undergone abrupt changes, mainly due to the impact of the domestic and international economic climate and the overcapacity of China's steel production.
Among them, exports have declined. From January to October, China exported 53.12 million tons of steel, which was a year-on-year drop of 1.2%; and exported 1.24 million tons of steel billets, a decrease of 79.8% year-on-year. The second is the sharp drop in steel market prices. Compared with the highest price this year, both hot-rolled and cold-rolled coils have fallen by more than 40%. Third, the company’s loss surface rapidly expanded. The price of steel products plummeted, but the import ore price in September increased by 72% year-on-year, and coking coal increased by 81% year-on-year. At a high cost, the company's loss surface continues to expand.
“The most immediate impact of the financial tsunami on the current steel industry is the declining demand.†Zhang Xiaogang said that industries with large demand for steel, such as construction, automobiles, and shipbuilding, have continued to slump with the intensifying financial crisis, such as automobiles, household appliances, and containers. Many large direct-supply users have reduced their orders.
Take Anshan Iron and Steel as an example. Before the financial crisis, the largest container manufacturing company in the world, CIMC, could reach 40,000 tons a month at the time of Angang's most orders, but now there is no one ton; the original and beautiful group is every month. Contracts ranging from 20,000 to 30,000 tons are now gone, and the volume of steel contracts with FAW Group has dropped from the previous 22,000 tons to the current 6 to 7 tons.
According to an information provided by Angang Group, in October, Anshan Iron & Steel achieved operating revenue of 7.842 billion yuan, a decrease of 1.506 billion yuan from the highest in July this year, a decrease of 16%.
"We are using the first half of the profits to make up for the current loss." Zhang Xiaogang said that due to the increase in the prices of purchased raw materials and the decline in the price of steel products, Angang has already entered a loss state. At the same time, it also faces greater financial risks. In the first nine months, Anshan Iron & Steel continued to increase its use of inventories, resulting in a substantial drop in net cash flow from operating activities and a high risk of capital.
In addition, Anshan Iron and Steel originally had an average export volume of 250,000 tons of steel per month. However, from January to October, Anshan Iron & Steel's export steel decreased by 23% year-on-year, and sales prices fell by 29%. Moreover, in order to protect the domestic manufacturing industry, some countries, such as Europe and the United States, may issue new trade protection policies, and the export of steel products may be more difficult in the future.
Regarding the later trend of the steel industry, Zhang Xiaogang believes that the impact of the financial crisis on the global steel industry has become more and more clear. However, it is hard to say how deep the impact is. Recently, the State Council has proposed the “ten measures†for expanding domestic demand, which will have a positive impact on expanding domestic demand for steel products and stabilizing the domestic steel market.
"We hope that the Central Government's policy will have an effect, because the country's main driving force is infrastructure construction, so the effect will first be embodied in building materials. At the same time, the central government has also cancelled the export tariffs on some steel products, but There is little demand in foreign markets, and it is difficult to increase the volume of exports, he said.
Analysts pointed out that at least 2 trillion yuan of the 4 trillion yuan of state-sponsored domestic demand is invested in infrastructure such as affordable housing, transportation, and airports. Direct and indirect steel demand is about 100 million tons, which can offset 2009 and 2010. The negative impact of falling demand in real estate, automotive, machinery, and shipbuilding industries. Among them, there are 50 million tons of steel demand will be released in the first quarter of next year.
However, Zhang Xiaogang stated that there are still many uncertainties in the operating environment of the steel industry: in the global climate recession, the impact on China's economy, the impact on the steel industry, and the impact on China's steel companies are uncertain. The price of ore and coal has not yet come down. There is still uncertainty as to what the next move will be. As the demand for steel in all countries has shrunk, trade frictions in exports may increase.
In addition, according to the preliminary prediction by China Iron and Steel Association, the domestic crude steel consumption ceiling in 2009 was 460 million tons, the minimum limit was 430 million tons, and the annual production capacity was 600 million tons. At present, many small-scale enterprises have stopped production once the price has picked up slightly. These small enterprises will be reopened, which will aggravate the imbalance between the production and demand capacity of our country's steel industry and the irrational structure.
Zhang Xiaogang believes that the first half of next year is very crucial to the steel industry. First, after March of this year, which is the first half of this year to stimulate domestic demand, according to the general law, the effect of the policy on the steel industry will emerge after six months. Second, in the first half of next year, a batch of new steel plants will be put into operation. Some projects will be put into production at that time. Therefore, the situation from March to May next year will be an important basis for judging the situation in the second half of next year.
"The impact of the financial tsunami on China's real economy has gradually begun to show itself. The current crisis is unprecedented, and the steel industry is one of the industries most affected and affected." Zhang Xiaogang told reporters that the situation facing the steel industry is very serious. Since August, the domestic steel market has undergone abrupt changes, mainly due to the impact of the domestic and international economic climate and the overcapacity of China's steel production.
Among them, exports have declined. From January to October, China exported 53.12 million tons of steel, which was a year-on-year drop of 1.2%; and exported 1.24 million tons of steel billets, a decrease of 79.8% year-on-year. The second is the sharp drop in steel market prices. Compared with the highest price this year, both hot-rolled and cold-rolled coils have fallen by more than 40%. Third, the company’s loss surface rapidly expanded. The price of steel products plummeted, but the import ore price in September increased by 72% year-on-year, and coking coal increased by 81% year-on-year. At a high cost, the company's loss surface continues to expand.
“The most immediate impact of the financial tsunami on the current steel industry is the declining demand.†Zhang Xiaogang said that industries with large demand for steel, such as construction, automobiles, and shipbuilding, have continued to slump with the intensifying financial crisis, such as automobiles, household appliances, and containers. Many large direct-supply users have reduced their orders.
Take Anshan Iron and Steel as an example. Before the financial crisis, the largest container manufacturing company in the world, CIMC, could reach 40,000 tons a month at the time of Angang's most orders, but now there is no one ton; the original and beautiful group is every month. Contracts ranging from 20,000 to 30,000 tons are now gone, and the volume of steel contracts with FAW Group has dropped from the previous 22,000 tons to the current 6 to 7 tons.
According to an information provided by Angang Group, in October, Anshan Iron & Steel achieved operating revenue of 7.842 billion yuan, a decrease of 1.506 billion yuan from the highest in July this year, a decrease of 16%.
"We are using the first half of the profits to make up for the current loss." Zhang Xiaogang said that due to the increase in the prices of purchased raw materials and the decline in the price of steel products, Angang has already entered a loss state. At the same time, it also faces greater financial risks. In the first nine months, Anshan Iron & Steel continued to increase its use of inventories, resulting in a substantial drop in net cash flow from operating activities and a high risk of capital.
In addition, Anshan Iron and Steel originally had an average export volume of 250,000 tons of steel per month. However, from January to October, Anshan Iron & Steel's export steel decreased by 23% year-on-year, and sales prices fell by 29%. Moreover, in order to protect the domestic manufacturing industry, some countries, such as Europe and the United States, may issue new trade protection policies, and the export of steel products may be more difficult in the future.
Regarding the later trend of the steel industry, Zhang Xiaogang believes that the impact of the financial crisis on the global steel industry has become more and more clear. However, it is hard to say how deep the impact is. Recently, the State Council has proposed the “ten measures†for expanding domestic demand, which will have a positive impact on expanding domestic demand for steel products and stabilizing the domestic steel market.
"We hope that the Central Government's policy will have an effect, because the country's main driving force is infrastructure construction, so the effect will first be embodied in building materials. At the same time, the central government has also cancelled the export tariffs on some steel products, but There is little demand in foreign markets, and it is difficult to increase the volume of exports, he said.
Analysts pointed out that at least 2 trillion yuan of the 4 trillion yuan of state-sponsored domestic demand is invested in infrastructure such as affordable housing, transportation, and airports. Direct and indirect steel demand is about 100 million tons, which can offset 2009 and 2010. The negative impact of falling demand in real estate, automotive, machinery, and shipbuilding industries. Among them, there are 50 million tons of steel demand will be released in the first quarter of next year.
However, Zhang Xiaogang stated that there are still many uncertainties in the operating environment of the steel industry: in the global climate recession, the impact on China's economy, the impact on the steel industry, and the impact on China's steel companies are uncertain. The price of ore and coal has not yet come down. There is still uncertainty as to what the next move will be. As the demand for steel in all countries has shrunk, trade frictions in exports may increase.
In addition, according to the preliminary prediction by China Iron and Steel Association, the domestic crude steel consumption ceiling in 2009 was 460 million tons, the minimum limit was 430 million tons, and the annual production capacity was 600 million tons. At present, many small-scale enterprises have stopped production once the price has picked up slightly. These small enterprises will be reopened, which will aggravate the imbalance between the production and demand capacity of our country's steel industry and the irrational structure.
Zhang Xiaogang believes that the first half of next year is very crucial to the steel industry. First, after March of this year, which is the first half of this year to stimulate domestic demand, according to the general law, the effect of the policy on the steel industry will emerge after six months. Second, in the first half of next year, a batch of new steel plants will be put into operation. Some projects will be put into production at that time. Therefore, the situation from March to May next year will be an important basis for judging the situation in the second half of next year.
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