Three years behind the most popular steel industry

2022-08-03
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From the loss of the whole industry to the record profits: the iron and steel industry has laid off more than 1.35 million employees in three years

associated press on July 5, Liugang Co., Ltd. released a performance forecast. It is estimated that the net profit of the company in the first half of this year will increase by 1.565 billion to 1.851 billion compared with the same period of last year, with a year-on-year increase of 395% - 467%

in fact, it is not just Liugang. The profits of Valin steel and Anyang steel, which have issued performance forecasts, have risen sharply, among which the net profit of Anyang steel has increased by more than 30 times

three years ago (2015), 31 iron and steel enterprises listed on A-share had suffered losses in the whole industry, with a total loss of more than 19.5 billion. Wuhan Iron and Steel Co., Ltd., which has become a history, lost more than 7.5 billion in that year, becoming the loss king of a shares in that year

three years ago, the steel industry was heavily in debt, and the debt ratio continued to rise; The financial expenses of 31 A-share steel enterprises reached 27billion yuan

pessimism pervades the whole industry. However, in just three years, iron and steel enterprises have emerged from the quagmire of huge losses and achieved record profits. What have they experienced during this period

behind the record profits of the steel industry: steel prices are rising

as early as 2017, the profits of listed steel enterprises increased significantly, and the performance of many steel enterprises reached the best level in history

according to the financial report of Valin steel, the company's net profit in 2017 reached 4.121 billion, an increase of 156% over the historical optimal level. The net profit of Songshan in 2017 also reached the highest level since its listing in 1997. After the merger of WISCO, the net profit of new Baosteel reached 19.1 billion in 2017; Its net assets can be operated by a single machine or connected to a computer. The yield of the machine has also reached a new high in the past decade

the positive performance of iron and steel enterprises is mainly affected by the tight balance between supply and demand and the strong steel price

Liuzhou Iron and Steel Co., Ltd. said in the performance pre increase announcement that the market remained basically stable in the first half of this year, the downstream demand increased, and the company's steel product prices and sales increased compared with the same period of last year. Valin Steel said that the supply and demand of the steel industry continued to be in a tight balance, maintained a good profit level, and the gross profit margin of products increased significantly

in fact, in 2016, the comprehensive index of steel price hit a new low of 57.75. What is the reason why the steel price has more than doubled in just two years

the government led de capacity is undoubtedly the most important reason. In february2016, the State Council issued the opinions on resolving excess capacity in the iron and steel industry to achieve poverty relief and development if you found any fault in the power plug. The document said that the production and operation difficulties of iron and steel enterprises have intensified, and the loss area and amount have been expanding, especially the problem of excess capacity. The document proposes to reduce the crude steel production capacity by 100million-150million tons in five years from 2016

however, the speed of capacity reduction in the steel industry has far exceeded expectations. In 2016 and 2017, the steel production capacity was 65million tons and 50million tons respectively, and the steel production capacity removed in two years was up to 115million tons. In addition, in terms of floor steel production capacity, the government shut down more than 600 floor steel enterprises, removing nearly 140million tons of production capacity

what is more noteworthy is that the current de capacity of the steel industry is still advancing. According to the latest report of Xinhua News Agency (July 4), Hebei Province will continue to unswervingly promote the de capacity work in the next three years, and will further reduce and withdraw 40million tons of steel production capacity, including 12million tons of steel production capacity this year

the iron fist de capacity of the steel industry has not only stabilized and recovered the steel price, but also greatly improved the capacity utilization of the industry. According to the Research Report of Tianfeng securities, in 2017, the capacity utilization rate of China's steel industry reached 84.7% until the oil level reached 1.5% of the sight glass. In 2015, this figure was only 66.99%

sad song of the steel industry: the number of employees has decreased by nearly 1.4 million in three years

however, for the steel industry, de capacity is a difficult and painful process. This can be seen from the large-scale layoffs in iron and steel enterprises

2016, maguoqiang, who was then the chairman of WISCO group, said that WISCO's Qingshan headquarters would gradually reduce its output. In the future, only 30000 of the 80000 people would make iron and steel, and WISCO group would lay off 40000-50000 people

in fact, in previous years, WISCO group had large-scale layoffs. According to the company official data, in 2010, the number of employees of WISCO group was 117500, and by the end of 2015, this number had dropped to 82000

not only WISCO group, but the whole iron and steel industry has experienced large-scale layoffs. According to the data of the Ministry of industry and information technology, in 2013, the number of employees in China's iron and steel industry reached an all-time high, reaching 4.2168 million. Since then, it has been declining all the way. By 2015, the number was 3.627 million

since 2016, when the State Council officially released the document on capacity reduction, the number of employees in the iron and steel industry has accelerated. As of may2018, the number of employees in the iron and steel industry was 2.268 million, a decrease of 1.359 million compared with the end of 2015

the creditor pays the bill: the debt repayment price of Chongqing Iron and steel stock is much higher than the issuance price

in fact, not only the iron and steel enterprises themselves are under pressure, but also the relevant creditors in the iron and steel industry are affected. Take the debt to equity swap of Chongqing Iron and steel as an example. In 2017, Chongqing Iron and steel, which suffered huge losses for two consecutive years, fell into the plight of insolvency. Subsequently, the company went bankrupt and restructured

Chongqing Iron and steel paid off its debts in the form of debt to equity swap. By the end of 2017, the company had received claims from more than 1400 creditors, with an amount of about 35billion. Chongqing Iron and steel divides the 35billion creditor's rights into property guaranteed creditor's rights, employee's rights and ordinary creditor's rights. Among them, the property guaranteed creditor's rights are paid in priority by the realization of the guaranteed property, the rest is converted into ordinary creditor's rights, the employee's rights are paid in full, and the ordinary creditor's rights are paid in the form of debt to equity

according to the debt to equity swap scheme, the company implements the conversion of capital reserve into shares at the ratio of 11.5 shares per 10 shares, with a total of 4.482 billion shares. The converted shares will be distributed to the creditors to offset the company's debt. The issue price is 2.15 yuan (the closing price before the company's trading suspension). It has a high probability of appearing on the old machine. However, although it was issued at 2.15 yuan/share, the debt repayment price of the company's shares was calculated at 3.68 yuan/share, which was 71.16% higher than the issuance price. At present, the company's share price hovers around 2 yuan

at present, the steel industry is still promoting capacity reduction. However, under the background of clearing the production capacity of the strip steel and the completion of the integration of a number of state-owned iron and steel enterprises, it is still worth paying attention to how long the steel price can be firm

according to the Changjiang Securities Research Report, the performance of the iron and steel industry is improving. In addition to the supply side changes caused by capacity removal, the real estate investment caused by the monetization of the third and fourth line shed reform is also an important factor. According to the research report, about 55% of the downstream demand for steel is distributed in construction. At present, the monetization policy of shed reform is being tightened quietly; In this context, the future profitability of iron and steel enterprises may suffer a certain test

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