Higher profit per ton of steel shrunk sharply

After the price of steel has experienced a major drop in May, the profit per ton of steel of steel companies has declined significantly. Institutional data shows that the current average profit of rebar production is about 316.2 yuan per ton, which is more than 700 yuan/ton lower than the highest point this year. As the profit per ton of steel has shrunk significantly, the profitability of some steel companies may be greatly affected.

Profit per ton of steel fell

Institutional monitoring data show that on May 11, the national average price of rebar reached a maximum of 6,236 yuan/ton, an increase of 1,916 yuan/ton from before the Spring Festival, an increase of 44.4%. On May 27th, the national average price of rebar fell to 4952 yuan/ton, a decrease of 1284 yuan/ton from the previous highest point, a drop of 20.6%. Since then, the price of rebar has risen slightly, compared with the lowest point of this round of decline, the rebound is about 200 yuan/ton.

Not only rebar, but also hot-coiled varieties have come out of the same market. On May 12, the national average price of hot-rolled coils reached 6665 yuan/ton, an increase of 2150 yuan/ton from before the Spring Festival, an increase of 47.6%. On May 27th, the national average price of hot-rolled coil fell to 5280 yuan/ton, a drop of 1385 yuan/ton from the highest point, a drop of 20.8%. Since then, the price of hot-rolled coil has risen slightly, and has rebounded by nearly 300 yuan/ton from the lowest point of this round of decline.

It is worth noting that due to the sharp correction in the price of finished steel products such as rebar, the profit per ton of steel has declined significantly.

Lange Steel Network pointed out that when steel prices were the highest, the profit of steel mills was basically maintained at more than 1,000 yuan/ton, and the profit of some steel mills was close to 2,000 yuan/ton. As the price of steel fell, the profit per ton of steel shrank to 100 yuan/ton to 500 yuan/ton at the lowest point. Some low-priced areas even suffered losses in building materials, and steel mills’ profits were greatly reduced.

On June 7, according to the Guotai Junan Research Report, the current profit of rebar production rose 96.8 yuan per ton to 316.2 yuan/ton, and the profit of hot coil fell 3.2 yuan/ton to 646.2 yuan/ton.

The half-year performance forecast is gratifying

As of the evening of June 7, a total of 6 listed companies in the A-share steel industry have disclosed their semi-annual performance forecasts, with a slight increase of 1 and an expected increase of 5, and all listed companies that have disclosed their performance forecasts are pre-happy. The above-mentioned six listed companies disclosed their semi-annual performance forecasts before April 30, and these companies are all forecasts based on the performance of the first quarterly report. As steel prices continued to stay in the rising range in the first quarter, these listed companies are generally optimistic about the first half of the year.

Some companies mentioned in the semi-annual performance forecast that the first quarter had a good start, which brought good performance growth to the company. Taking Nanjing Iron and Steel Co., Ltd. as an example, the company pointed out in the semi-annual performance forecast that my country’s economy started well in the first quarter, the recovery momentum continued to be stable, and the prosperity of the steel industry has improved. The company focuses on advanced steel materials, the proportion of high value-added special steel products and profits. Contribution has increased, and the company’s net profit is expected to increase by more than 50% in the first half of the year.

Some companies have a huge year-on-year growth in the first quarter, which is expected to drive growth in the first half of the year. Taking Chongqing Iron and Steel as an example, in the first quarter, the company seized the favorable opportunity for the recovery of the steel market, steadily improved the scale of production and sales, and achieved a net profit of 1.092 billion yuan attributable to shareholders of listed companies, a year-on-year increase of 26078.1%. Based on this, the company expects that the cumulative net profit at the end of the next reporting period will increase significantly compared with the same period of the previous year.

Listed companies that are pre-happy are generally more optimistic about the market in the second quarter. Shagang Co., Ltd. expects to achieve a net profit of 360 million yuan to 540 million yuan attributable to shareholders of listed companies in the first half of the year, a year-on-year increase of 42.69% to 114.04%. The main reason for the change in performance was that due to the increase in steel sales prices and year-on-year sales growth, the company’s operating income and product sales gross profit were better than expected. It is expected that the 2021 semi-annual performance will achieve year-on-year growth.

The market outlook is expected to be weak

In view of the medium and long-term trend of the steel market, Lange Steel Network horsepower analysis believes that relatively strong domestic and foreign demand and suppressed supply capacity are superimposed by high cost support. In the next 1-2 months, steel prices will fluctuate at the current price level. In view of the recent increase in market supply and weakening seasonal demand, prices may fluctuate weakly.

“In the short term, we need to pay attention to the new steel industry policies, including export tariffs, capacity reduction and look back at inspection results, and the Ministry of Industry and Information Technology’s production suppression policy. In addition, we also need to pay attention to financial data, manufacturing orders, and exports in May and June. And the rate of decline in market inventories.” Ma Li pointed out.

The Industrial Securities Research Report pointed out that under the background of overseas demand recovery + domestic manufacturing recovery + supply-side “dual limitation”, steel prices do not have the basis for a substantial decline. This oversold rebound is in line with previous judgments, and subsequent steel prices may fluctuate upwards. , The profitability of the industry will remain within a reasonable range. In the context of strict control of the supply side, the profit center of the entire steel industry may gradually rise.