In recent years, the profitability of the steel industry continued to decline, increasing the pressure of enterprise funds. As of August 1, 2011, domestic steel prices throughout the year to raise funds of 90.1 billion yuan, a year earlier (as of August 2) an increase of 45.3 billion yuan. This year, the size of the domestic steel enterprises to raise funds is still huge demand for liquidity in the show business.
The data show that the first half of the China Steel Association member of the iron and steel enterprises realized a total profit of only 2.385 billion yuan, representing a substantial decrease of 54.549 billion yuan. However, the fixed asset investment growth of the steel industry declined. Fixed assets of steel industry in the first half of a total investment of 291.1 billion yuan, an increase of 12.05 percent, the growth rate fell 4.8 percentage points. It is worth noting that the to overcapacity black smelting and rolling investment of 228.1 billion yuan, the growth rate fell 5.4 percentage points; Ferrous Metals Mining to invest 63 billion yuan, the growth rate year-on-year increase of 4.2 percentage points.
The reason why the domestic steel industry into a small profit or loss on the edge of the dilemma, mainly in the case of weak demand for downstream steel industry, iron and steel production will still expand, further exacerbating the contradiction between supply and demand, resulting in steel prices continued to fall, while our foreign iron ore dependence on more than 60% iron ore price is always at a high level, encroachment into the profits of the domestic steel prices.
Recently, the decline in the prices of the domestic steel market has slowed down, prices of long products stabilize signs, since August 7 integrated long steel trading price has fluctuated slightly around 3790 yuan / ton, while the flat material prices are still vulnerable downstream. Industrial output rose 9.2 percent in July, down 0.3 percentage points compared to June, show that domestic economic growth is still weak. CPC Central Committee Political Bureau meeting held in the end of July, said the steady growth in the second half of the work should be on the more important position in order to expand domestic demand for the strategic basis for a solid foundation for the development of the real economy. Expected the second half of China's economy to continue to maintain a moderate steady growth, the profitability of the steel industry will be improved, but low-profit trend is difficult to reverse.
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