Rising costs in the fourth quarter corporate earnings will continue to expand steel

Rising costs in the fourth quarter corporate earnings will continue to expand steel

Directly contributed to the rising cost of production of steel companies raised prices, not only can offset the cost pressures, but also direct the expansion of steel enterprises level of profitability.

19, National Development and Reform Commission announced that starting from November 20 national non-residential electricity prices per kilowatt-hour (C) an average of 2.8 cents. Although the electric iron and steel enterprises large, but the cost of electricity per tonne of account not much. According to related statistics, the cost of outsourcing corporate power accounts for 4% -9%. At present, China's iron and steel enterprises is about 300-600 kWh per tonne of steel consumption (KWh), this non-residential electricity prices per kilowatt-hour (C) an average of 2.8 points, meaning that 8.4-16.8 per ton of steel costs, or 2.5% -5%.

China's steel market has always been to steel factory price as the market guidance prices, although the steel price adjustments by market factors, but steel prices in the price for the more powerful overall performance, particularly the large integrated steel enterprise class, such as Baosteel, Anshan Iron and Steel, Hebei Iron and Steel and other high-end products have in some of the larger pricing. Although the price per tonne of steel cost increases did not have a greater impact, but it will raise prices for the steel enterprises to provide an excuse.

Price increases after the announcement the week, steel producers around the building one after another up prices, including Hebei Steel Group December wire, steel prices were up 150,100 orders yuan / ton, such as steel mills have raised Shougang December prices policy; hot and cold coils up the average price of 300 yuan / ton; plate price increase from 60 to 200 yuan / ton range. Steel prices in the current high level trend, the market is generally more peaceful state of mind, who on the whole a relatively late composition of the majority optimistic.

Since 2009, steel prices round the surplus profits of the gradual losses. Impeded by export and domestic impact of rising inventories, domestic steel prices since the beginning has been fluctuating around the baseline. Therefore, the iron and steel enterprises have been plagued with losses in the meager profit margins. China Steel Industry Association released statistics show that in 2009 first half into the statistics of the 71 large and medium manufacturing enterprises steel core business sales 9,550.3 billion yuan, down 28.07 percent; profit of 1.725 billion yuan, down 98.32% , profitability, fell to its lowest point since 2004. Since the third quarter, steel prices have turned loss into gain, mainly due to rising steel prices, despite a sharp decline in steel prices in August, but three quarters of the overall domestic steel prices to keep up momentum to ensure that the steel prices this season losses.

Analysts believe that fourth quarter profit of steel enterprises will continue to expand production, increase in costs has always been a major price hike steel prices rhetoric, back in 2008, after the jump in ore prices, steel prices have increased the price of steel is played, resulting in steel a larger short-term price gains. Therefore, the price increases or price increases will open the way steel prices. Meanwhile, the recent raw material market remained strong, overall prices rising and the market for iron ore prices in 2010 is generally expected that steel prices are likely to take the opportunity to adjust the price further up product prices, not only can offset the cost pressures able to directly expand the profitability of steel enterprises)

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