Raw material prices skyrocket, and Angang Steel expects net profit to decrease by 70% in the first three quarters
Since January of this year, iron ore prices have skyrocketed due to the impact of a dam collapse in Vale, as well as two other major iron ore suppliers, BHP Billiton and Rio Tinto, which reduced their shipments due to the March hurricane. However, several industry insiders have pointed out that as we enter the traditional consumption peak season of "nine gold and ten silver", multiple factors are intertwined, and steel prices and profit turning points may emerge.
The decline of the steel industry has not yet been reversed
In the third quarter, domestic steel companies have not yet completely reversed the decline caused by external factors.
On October 15th, Ansteel Group's listed steel company, Ansteel Group, released a performance forecast for the first three quarters of 2019. It is expected that from January to September this year, Ansteel Group's net profit attributable to shareholders of the listed company will be 1.722 billion yuan, a decrease of approximately 74.88% compared to the same period last year.
Ansteel Group stated that the main reasons for the significant decrease in net profit attributable to shareholders of listed companies during the reporting period compared to the same period last year are: firstly, the significant decline in steel prices due to factors such as the downturn in the domestic automotive and home appliance industries; Secondly, due to factors such as the collapse of the tailings dam in Brazil's Vale at the beginning of the year and the high demand for iron ore from domestic steel companies, raw material prices have increased, significantly compressing the profitability of steel companies.
It is worth noting that information from Lange Steel Network shows that in the 41st week of 2019 (2019.10.8-10.11), Lange Steel's national comprehensive steel price index reached 146.7 points, an increase of 0.07% compared to before the holiday and a decrease of 13.15% compared to the same period last year.
At the same time as prices have decreased, international mining giants have taken control of iron ore prices, becoming another major factor that erodes the profits of steel companies. According to the China Steel Association, at the end of September, the China Steel Price Index (CSPI) was 106.09 points, a decrease of 0.96% from the beginning of the year and a year-on-year decrease of 15.55%; During the same period, the CIF price of imported iron ore from CIOPI increased by 30.31% compared to the beginning of the year, with a year-on-year increase of 22.07%.
The fluctuations in iron ore prices stem from changes in the supply of international mining giants such as Vale. On the afternoon of January 25th this year, a tailings dam leakage occurred in the mining area of Vale in Brumadiniu, Minas Gerais, Brazil, which directly led to the shutdown of Vale's 93 million ton iron ore production capacity.
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Since January of this year, iron ore prices have skyrocketed due to the impact of a dam collapse in Vale, as well as two other major iron ore suppliers, BHP Billiton and Rio Tinto, which reduced their shipments due to the March hurricane.
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