Steel industry: profitability is high

Abstract Steel companies' profitability improved and production remained high. With the improvement of the profitability of steel enterprises, their willingness to resume production has become stronger and stronger. Although the daily output of crude steel in this period has slightly declined, it is still at a high level. According to the latest statistics of China Steel Association, the average daily output of crude steel in the middle of August 2013 is 21...
Steel companies' profitability improved and production remained high. With the improvement of the profitability of steel enterprises, their willingness to resume production has become stronger and stronger. Although the daily output of crude steel in this period has slightly declined, it is still at a high level. According to the latest statistics of China Steel Association, the average daily output of crude steel in the middle of August 2013 was 2,118,100 tons, down by 2,600 tons or 1.19% from the previous year's 2,143,700 tons. In the same period, the daily output of crude steel in key steel enterprises also fell from the previous month. According to the data of China Steel Association, the daily output of crude steel in key steel enterprises was 1.739 million tons, which was down by 25,600 tons or 1.45% from the previous year's 1.746 million tons. .


Sales volume declined slightly from the same period in July. The average daily sales volume of 81 key steel enterprises in the same period was 1,479,100 tons, which was slightly lower than the 1,480,500 tons in mid-July by 13,700 tons or 0.09%. In terms of subdivided varieties, the sales volume of the plates was better than that of long products. Sales reached 7.375 million tons, down 1.2% from the 7461 thousand tons in mid-July; while the sales of sheet and strip reached 6.9744 million tons, an increase of 1.3% from the 6.864 million tons in mid-July.

Inventories of key steel enterprises rebounded again and rebounded to 12.83 million tons. In the first ten days, 81 key steel enterprises had 12.83 million tons of steel at the end of the year, an increase of 665,000 tons or 5.47% from the previous period of 12.16 million tons in the first ten days of August. The stock at the end of the period was equivalent to 7.34 days per day, which was lower than the 7.44 days in the first quarter of August. 0.1 days, higher than the 13-year average of 0.23 days; the end-of-day inventory is equivalent to 8.67 days of daily sales, which is 0.47 days lower than the 9.14 days in early August and 0.46 days higher than the 13-year average.

The ex-factory price of steel rose from the previous month. The average price of steel products of 81 key enterprises in the first ten days was reported to be 3,963 yuan/ton, up by 32 yuan/ton or 0.81% from the previous year's 3,931 yuan/ton. In the case of subdivided varieties, the sales price of this long-term long product was 3,727 yuan. / ton, the chain rose by 1.2%%, the plate sales price of 4,129 yuan / ton, down 1.61% from the previous month, the average price of the pipe was reported at 5,178 yuan / ton, an increase of 1.91%.

Investment strategy: With the rebound of steel prices, the industry's profitability has further improved. This week (8.29) profitable steel enterprises accounted for nearly 80%, and the improvement in profitability has made steel mills' willingness to return to work more intense, and production has rebounded rapidly. The latest data shows that the blast furnace capacity utilization rate in Tangshan is 93.64%, and the national estimated blast furnace capacity utilization rate is about 92.15%, which is a big rebound from the previous period. From the sales side, the industry is in the traditional off-season, and the sales data of key steel enterprises are going through. After the strong growth in July, it also weakened. At the same time, the steel stocks in the steel industry steadily declined, while the water level of the key steel enterprises showed a rebound. We believe that this indicates that the steel traders are not willing to purchase goods at present, and the steel traders have demand for the market. Slightly pessimistic, in the medium and long term, as high-priced mines enter the production chain, the profitability of steel companies may be weakened, which may lead to a new round of passive de-stocking process of steel mills, and may have a negative impact on steel prices.

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