On november 13, the wisdom astadak news agency reported that the overall low pattern in the steel industry remained unchanged, that the prices of mines and steel were declining, but that there had been an increase in net profits in the third quarter of semi-market steel companies in relation to each other, and that there had been a black horse and steel share (600808. Sh) and a saddle and steel share (000898. Sz). A number of industry sources believe that, as mining prices continue to decline and the financial situation of steel companies improves, the positive business performance is expected to continue in the fourth quarter。
According to statistics, the total net profits of 31 listed steel companies in the third quarter of 2014 amounted to $2. 81 billion, while the share of precious steel (600019. Sh) continued to run at a profit of $1,856 million, accounting for 66 per cent of the total profits. Of these, a total of 16 enterprises achieved an improvement in net gains over the same period, which was increased by the previous shares of horse steel, saddle steel, hebei steel (000709. Sz), new casting tubes (000778. Sz) and new steel (600782. Sh), respectively, by 11612 per cent, 445, 315 per cent, 217 per cent and 198 per cent, thanks to the fall in ore prices and depreciation adjustments。
The head of the rang iron and steel information research centre, qingu kingdom, stated that, although mine and steel prices were going down in both directions in the third quarter, the fall in the larger mine prices had produced dividends for many steel companies. In the third quarter of 2014, the steel index declined cumulatively by 7. 3 per cent, while the coke index, which is the main raw material, and the iron ore index, which is 62 per cent pud, fell by 3. 4 per cent and 17. 3 per cent, respectively, and the mine price fell by about twice the price of steel, inevitably increasing the profitability of steel companies。
The third quarter net gains were benefiting from a 97 per cent increase over the same period for the leading lead steel steel shares. In july-september 2017, the price of steel-stocked steel was largely stable, while the declining cost of iron ore prices gradually became apparent, resulting in an increase in the gross domestic product ratio and ring ratio of steel manufacturing operations. In addition, the relocation and disposal of the precision steel plant resulted in an increase of $410 million in off-the-job income。
Against the backdrop of a decline of 119. 4 per cent in net earnings in the first half of the year and 17. 18 per cent in the same period, the net gains in the third quarter rose to $404 million and $346 million respectively, and other financial indicators, such as operating profits, total profits, increased significantly over the same period of the previous year。
In response, the saddle steel shares explained that the improvement in profits in the third quarter was due to lower market raw fuel prices, and that the company had increased its procurement efforts and reduced the impact of procurement costs. At the same time, it has increased its efforts to restructure varieties, increase the proportion of sales of strategic, uniquely leading and new products, increase the impact of steel price levels, and significantly reduce process costs and costs。
The sharp increase in the performance of the steel shares in the three quarters was mainly due to depreciation adjustments and low-priced inventories, and the optimization of their product structure contributed to their profitability. After the implementation of its new depreciation years since july, the owner's equity and net profits increased by approximately $338 million. The study released by yangtze at the end of october concluded that the significant decline in stock levels in the second quarter due to the consumption of high-priced stocks of raw materials in the first quarter had laid the foundation for improved performance in the third quarter。
Without exception, the prolonged depreciation of fixed assets was also the main reason for the continued sharp increase in hebei steel performance, which was adjusted in march 2014 to make a profit of $375 million per quarter. With the depreciation adjustment and the accelerated decline in mineral prices, hebei steel earned between $334. 6 and $333 million in the first half of the year, while net profits in the third quarter increased between 315 and $167 million。
The emerging casting tube was driven by an increase in government subsidies and proceeds from the disposal of fixed assets, resulting in a significant increase in net profits of 217 to 163 million yuan over the same period in the third quarter. Of this amount, $22. 447 million, or 14 per cent of the total profits for the current period, are government subsidies that are included in the current gains and losses alone。
In fact, the third quarter performance of large and medium-sized chinese steel enterprises has also improved. Data from the china iron and steel industry association indicate a loss of $660 million in the first half of 2014 for the main steel business, while a successful reversal in the first three quarters means that at least $660 million will be earned in the third quarter for the main steel business. The overall situation in the steel industry improved slightly in the fourth quarter, with the end of the steel industry pmi index in october rebounding to 46. 0 per cent, a return of 2. 4 per cent。
With regard to the sustainability of industry profits in the fourth quarter, senior research fellow quiu of the west bank new main line has jumped to the point that steel performance tends to be better than in the third quarter, as the fourth quarter is a concentration period for government finance。
“the profitability and funding of steel companies in the fourth quarter may be the best period of the year.” kew jumped to indicate that the storage of pre-priced raw materials at steel plants is now largely depleted, and that steel prices, as a result of the apec conference and environmental governance, continued to rise in october when mining prices remained low, allowed the enterprise to gain more profit。
The kingdom shares the view that the fourth quarter's profit-for-profit posture for steel companies will continue, and that, with the implementation of the new environmental protection law in 2015, the cost of the investment and operation of steel companies will increase, undoubtedly increasing the pressure on the profitability of enterprises, which still face enormous challenges in the long run。
Published by liu minjin/chou min hui
* the information in this paper is for reference purposes only and is used by investors to manage their own risks。
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