Nippon Steel, a major Japanese steel company, signed a supply contract with CVRD of Brazil, the world's largest iron ore supplier. After the price increase of 7 1.5%, Baosteel Group, which participated in the negotiations on behalf of China steel enterprises, was forced to announce the acceptance of this result.
Since April this year, the price of imported iron ore has increased by 7 1.5%, and the cost pressure of China iron and steel enterprises has increased sharply, which will severely impact small and medium-sized iron and steel enterprises. China's entire iron and steel enterprises will increase the cost by 20-30 billion yuan due to the import of iron ore, accounting for 20-30% of the profits of the whole industry in 2004, and the risk of performance decline of small and medium-sized iron and steel enterprises and downstream iron and steel enterprises such as machinery, shipbuilding, automobiles and containers will increase.
Compared with the 20% to 30% increase previously expected by the market, the increase in 2005 greatly exceeded people's expectations. In recent years, China's steel production has been growing at a high speed, which makes it increasingly dependent on iron ore imports. In 2003, China surpassed Japan and became the largest importer of iron ore in the world. In 2004, China's national steel output reached 272 million tons, and imported iron ore reached 208 million tons, up 40.5% over the previous year. The dependence on imports has risen rapidly to 50%, and iron ore imports will continue to rise in 2005. In the case of high dependence on imports, the sharp rise in iron ore prices will inevitably lead to a sharp rise in the cost of iron and steel enterprises. For China iron and steel enterprises that have experienced and are still experiencing the rapid increase in raw materials and freight prices, this huge increase obviously greatly increases their cost pressure.
At present, domestic steel demand, especially high-end plate demand, is still quite strong, and there is still a certain gap between domestic steel prices and international ones. Therefore, a few large iron and steel enterprises with strong strength and advanced production technology can produce more high-end products, and by raising product prices, the cost factors of iron ore rising will be transferred to downstream enterprises, thus avoiding losses. When Nippon Steel and CVRD announced the sharp price increase of iron ore, several major steel mills, such as Baosteel and WISCO, which mainly produce high-value-added high-end cold-rolled plates and silicon steel, announced that they would raise the ex-factory price of steel in the second quarter by 300 to 400 yuan.
Before Baosteel officially announced its acceptance of the international iron ore price increase, Baosteel and Panzhihua Iron and Steel Co., Ltd. have successively raised their product prices. The rise of steel market will inevitably involve the chain effect of downstream industries such as construction, machinery, light industry, automobile, container, shipbuilding, railway and petrochemical.
If the price per ton of steel rises by 200 yuan/ton to 300 yuan/ton, these large enterprises will be able to absorb the adverse effects caused by the rising iron ore price. Judging from the increase of steel price since February, Baosteel's steel price in the second quarter will continue to increase by 400-500 yuan/ton on the basis of the increase of 300-400 yuan/ton in the first quarter. A considerable number of construction steel manufacturers have announced that the steel price has increased by 50- 100 yuan/ton. Meanwhile, the domestic steel price is lower than the international market price. Driven by the rising cost of iron ore, the international steel price will continue to rise or remain high, creating a good external environment for the iron and steel industry in China.
The price increase of iron ore has a great influence on enterprises that rely heavily on imported iron ore, which mainly produce plates. At present, the domestic plate price is lower than the international market 10%-20%. These steel enterprises and product users are fully capable of digesting this price increase factor. The total amount of imported iron ore only accounts for 40% of the domestic market. After the price increase of imported iron ore, the iron ore price obtained by large steel enterprises is not higher than the current domestic iron ore market price, and the comparative advantage of large steel enterprises is still very obvious. For those iron and steel enterprises that own their own iron ore, such as Lian Gang, Jiugang Hongxing, Angang New Rolling, Tangshan Iron and Steel Co., Ltd. and Xingang Vanadium, the increase in iron ore prices is undoubtedly good.
For most small and medium-sized iron and steel enterprises with weak funds and weak risk tolerance, which mainly produce construction steel or low-end products, due to the limited space for price increase, their costs will be difficult to pass on and they can only passively bear the cost losses. For small and medium-sized iron and steel enterprises that mainly produce construction steel, as the investment in fixed assets and real estate will continue to decline, the domestic demand for construction steel such as rebar and wire rod will further decrease, so it will be difficult for the price of construction steel to continue to rise sharply.
Since February this year, although a considerable number of construction steel manufacturers have raised their prices by 50 yuan/ton to 100 yuan/ton, they are still far from reaching the level of digesting costs. It is expected that the steel market will gradually slow down in the second half of the year, and the decline in the performance of the majority of small and medium-sized steel enterprises in 2005 will be inevitable.
Opportunities brought by the price increase of iron ore to the development of iron and steel enterprises —— A rational view of the sharp price increase of iron ore
How to treat the sharp price increase of iron ore deserves our serious consideration. Judging from the resource support conditions, the domestic iron ore supply and demand situation in 2005 should be better than that in 2004. In 2005, the iron ore import in China market increased by about 15% at the most, because China imported 210 million tons of iron ore last year, but the actual consumption exceeded10 million tons. At present, there are more than 37 million tons of imported ore stored in the port, not including the iron concentrate stored in steel mills in winter. If the imported ore reaches 240 million tons this year, only 30 million tons more than last year, with an increase of 14%, the port inventory will be about 280 million tons, while the consumption of imported iron ore last year was less than1900,000 tons.
Judging from the steel price, the global and domestic prices will remain at a high level in 2005, while the prices of coal, electricity, oil and transportation in China market are all rising, which leads to the rising production costs of domestic steel enterprises and also supports this high price. At the same time, since most of the iron ore imported from China last year is at the current market price (much higher than the negotiated price), the new round of ore price increase will not have much impact on most iron and steel enterprises entering the market price in China, and it is expected that enterprises will still achieve a high profit level in 2005.
Baosteel reluctantly accepted a 7 1.5% increase in iron ore prices, and the shadow of a sharp rise in raw material prices made investors vote with their feet. The share price of the steel plate, one of the "five golden flowers" of blue-chip stocks, has shown a continuous downward trend recently. However, by raising steel prices, controlling raw material costs and adjusting product structure, the current sharp increase in raw material costs has not affected the benefits of listed companies. On the contrary, these steel giants are still considering expanding production capacity and increasing production.
Join hands to control the cost of raw materials
In the case of tight supply of iron ore and rising price, steel enterprises with their own mines obviously have a strong cost advantage. Take Benxi Steel as an example, its 100% raw materials are supplied by Benxi Steel Group. Benxi Iron and Steel Group has abundant mineral resources such as Nanfen Mine and Waitoushan Mine, which makes the self-sufficiency rate of the group's ore reach over 80%. In addition, Angang, which is only100km away from Benxi, also has two iron concentrate raw material bases, with proven iron ore reserves of 9.3 billion tons.
It is understood that in the past two years, Liaoning Province has invested 654.38+0.22 billion yuan in geological exploration, and discovered some iron ores with large reserves one after another, and included the iron ore resources of four mining areas in Angang Group, thus increasing its iron ore resources by 654.38+0.646 billion tons on the original basis. No wonder Angang declared that "raw materials can be used for a hundred years".
However, what attracts more market attention should be the rumored news that Angang Group and Bengang Group will merge. The person in charge of the Liaoning Provincial Party Committee is currently in close consultation with the two major groups. Benxi area, sandwiched between Angang and Benxi Steel, is extremely rich in iron ore resources, and the proven iron ore reserves account for about a quarter of the national reserves. The merger will form effective cost control and generate huge scale benefits. At this time, the soaring price of iron ore will undoubtedly stimulate the completion of the merger and reorganization of the two groups.
So what measures will be taken to control the cost of raw materials for some listed companies with low ore self-sufficiency rate? Own mines only account for 20% of the supply. While increasing the exploitation of its own mines this year, Ling Gang will strengthen cooperation with nearby small mining areas to ease the pressure of raw material supply. Angang, which signed a long-term strategic agreement on iron ore with Brazil's CVRD Mining Group, also said that it will strengthen cooperation with several large mining areas such as Hebei and Shanxi and expand raw material supply channels.
Adjust product structure
Domestic iron and steel giants can digest the impact of rising raw materials through their own strength and market role. In fact, in the face of rising raw material prices, in addition to trying to control raw material costs, the adjustment of product structure is undoubtedly one of the best ways for these steel giants to cope with rising raw material prices through their own strength. For example, while continuing to strengthen cooperation with domestic and foreign mining areas, Angang will step up product structure adjustment this year, gradually reduce the proportion of building materials and steel in product composition, and increase the production capacity of steel plates with higher profit margins.
According to the survey of China Iron and Steel Industry Association in 2003, it is estimated that the demand for steel in China domestic market will exceed 270 million tons in 2005. At the same time, it is predicted that the proportion of plate and strip will increase from 39.42% to 43.46% in 2005, and will further increase to 50. 18% in 20 10. At the same time, cold-rolled sheet, hot-rolled sheet, coated sheet, coated sheet, stainless steel, silicon steel sheet and other varieties still have room for rapid development.
Developing high-tech, high value-added plate products and adjusting product structure will be the main tasks facing the steel industry. For example, Ling Gang Company will make good varieties of steel according to the established policies, increase the proportion of varieties of steel, and gradually change the product structure mainly based on ordinary steel. This year, we will focus on developing nine new varieties, such as machinery and light industry, so that the steel output will increase by more than 1 times.
At present, the iron and steel giants have stepped up their efforts to adjust their product structure. Due to the high added value of products and insufficient market supply, enterprises producing high-end products will passively accept price increases and gain greater initiative by adjusting product structure on a large scale. Some small and medium-sized iron and steel enterprises that produce low-end products and do not have the ability of structural adjustment will be affected to some extent.
Transfer cost load
Based on the particularity of the steel industry's relative monopoly and strong downstream demand, the steel industry, as the upper end of the supply chain, has a strong initiative of cost transfer, so in the case of rising raw material prices, steel prices have become inevitable. Compared with other measures, this is the most critical factor for steel enterprises to quickly digest the rising prices of raw materials.
After Baosteel signed an agreement with foreign iron ore suppliers to increase the price of iron ore by 7 1.5%, Baosteel immediately announced the steel price in the second quarter of this year, with a price increase of 400 ~ 500 yuan per ton of steel. Since then, WISCO immediately reported that the average ex-factory price per ton of steel will continue to increase by about 200 yuan in the second quarter on the basis of the price increase in the first quarter. In addition, Anyang Iron and Steel, Hangzhou Iron and Steel, Jigang, Baotou Steel and other enterprises have also raised their product prices significantly recently. In fact, Baosteel, Angang, WISCO and other steel giants have started to raise prices since the third quarter of 2004, and prices continue to rise. At present, the price increase of steel in the market has exceeded the price increase of iron ore.
Baosteel has made it clear that it can absorb the rising cost caused by the soaring iron ore price this year. For Baosteel, the price of iron ore has increased by 7 1.5%, which means that the cost per ton of ore has increased by 17 US dollars, and the cost per ton of hot metal has increased by 27 US dollars. Since April, the average cost per ton of steel has increased by 300 yuan.
Corresponding to the above situation, steel giants are generally optimistic about market demand and increase production capacity. The total output of Angang is planned to be 4.5 million tons, an increase of 15% over last year. Benxi Iron and Steel may reach 6 million tons this year on the basis of an annual output of 5 million tons last year. In 2005, WISCO will increase the output of hot rolled commercial plates by 654.38+500,000 tons respectively, and its second cold rolling project will be completed and put into operation by the end of 2005, with an annual output of 265.438+500,000 tons.
Even considering the related factors such as the rising price of coke and electricity, due to the strong demand of downstream industries, the leaders of these industries can still transfer costs, continue to expand capacity and increase production in the future, and maintain good performance growth. On the other hand, the current increase in iron ore prices will mainly adversely affect some small and medium-sized steel enterprises, which will accelerate the integration of the survival of the fittest in China's steel industry, and it will be a rare opportunity for listed companies with general scale advantages.