The cost of raw materials has fallen while the price of steel has risen. At the same time, steel companies have been aggressively cutting costs and cutting profits, and profits have naturally increased substantially.

       On August 28th, Baosteel Co., Ltd. released a beautiful mid-year report. In the first half of the year, Baosteel achieved a revenue of 148.534 billion yuan, a year-on-year increase of 2.17%; net profit attributable to shareholders of listed companies was 10.09 billion yuan, up 62.23% year-on-year; net profit attributable to shareholders of listed companies was 9.444 billion yuan. , an increase of 52.30%.

       In the 21st Century Business Herald, through the Wind terminal, the mid-term report of various industry sectors found that in addition to the good performance of real estate and finance industries, the commodities such as steel and coal were generally profitable in the first half of this year, while thermal power, clothing manufacturing, etc. The profit growth rate of the industry has obviously weakened. Some people in the industry will be ton of steel profits of up to 500 yuan -1000 yuan, known as the steel "printing machine" market.

       As of 5 pm on the 29th, a total of 26 mid-year newspapers were released in the 32 listed steel enterprises in the Wind Shenwan steel sector. Among them, there are 25 revenue growth, 7 of which are over 30% year-on-year; 21 of the net profit attributable to shareholders of the parent company have increased by more than 100% year-on-year, that is to say, the number of companies whose vesting net profit has doubled 80%; If you look at the net profit after deducting non-recurring gains and losses, there are 14 companies that have increased by more than 100% year-on-year, accounting for over 53%, and there are 10 over 200%, of which Anyang Steel has an indicator of 4704%.

       Commodity high prosperity market

       Talking about the profitable market of iron and steel enterprises in the first half of this year, senior steel analysts told the 21st Century Economic Reporter that the steel industry has continued the booming trend since last year, and the profitability of listed steel companies has long been expected in the industry.

       Due to the supply-side structural reforms and de-capacity that lasted for more than two years, the low-end backward production capacity of the steel industry and “bad coins” such as “strip steel” were cleared, and the industrial order returned to normal; in addition, due to environmental protection and production In the case of de-capacity, some of the production capacity of the steel supply side was affected. In the case of a decline in social inventories, supply was relatively tight, steel prices continued to remain high and there was a slight increase in the near term.

       From the perspective of specific raw fuel prices and other cost perspectives, according to the steel price index, the steel price composite index for the first half of this year was 150.4, up 15.51% from the previous year's 130.2. Taking the hot-roll type as an example, the average price of hot-rolled one-ton in the first half of the year was 4,166 yuan/ton, compared with 3,550/ton in the same period last year. In the same period, the average spot price of imported ore ports as the main raw material was 493 yuan / ton, compared with 576 yuan / ton last year, down 14.41%. “The cost of raw materials has fallen while the price of steel has risen. At the same time, steel companies have been sharply deleveraging to cut costs, and profits have naturally increased substantially.”

       According to Baosteel's interim report, the gross profit per ton of steel was 790 yuan, an increase of 170 yuan / ton. According to the statistics of the China Iron and Steel Association, in the first half of this year, the overall operation of the steel industry was steady and positive, the benefits continued to improve, and the structure was continuously optimized. The national key large-scale steel enterprises included in the statistics of the Steel Association achieved a total profit of 139.273 billion yuan, a year-on-year increase of 151.15%.

       As the economic benefits of steel companies improve, the debt-to-asset ratio of listed companies continues to decline. According to the steel association data, as of the end of June, the average asset-liability ratio of key national large-scale steel enterprises fell to 67.30%, a year-on-year decrease of 3.97 percentage points.

       Similarly, due to supply-side reforms and de-capacity, coal companies and downstream power companies have significantly increased the proportion of long-term coal contractors, and coal supply and demand have remained stable in the first half of the year.

       In the coal mining sector, 31 of the 37 coal mining and coke processing companies have released “transcripts” for the first half of the year, of which 24 have increased their revenues year-on-year; in the net profit rankings after deducting non-recurring gains and losses, Jizhong Energy 13 listed coal enterprises such as China Shenhua, Datong Coal and Shaanxi Coal have achieved a year-on-year increase of more than 100%.

       Among them, the coal leader China Coal Energy's performance this year is quite worth mentioning. In the first half of the year, China Coal Energy achieved a revenue of 50.21 billion yuan, a year-on-year increase of 34.5%. The net profit attributable to shareholders of the parent company was 2.756 billion yuan, a year-on-year increase of 67.5%, exceeding the net profit of the previous year of 2.414 billion yuan.

       According to the National Bureau of Statistics, from January to July this year, the coal mining and washing industry achieved a total profit of 180.77 billion yuan, a year-on-year increase of 18.0%.

       Optimistic expectations in the second half

       The cycle logic of commodities, the only law that is observed is the relationship between supply and demand. First, in the second half of the year, domestic steel enterprises will continue to promote supply-side reforms and industrial upgrading, which means that steel companies will now allocate some funds for technology research and development upgrades and environmental protection.

       From the demand side, the two major industries of downstream steel, real estate infrastructure and automobile industries are currently facing a period of deep adjustment. “Even if the fixed investment in real estate increased slightly in the first half of the year, in fact, the real estate developers are tight, and the new construction is unlikely to rebound in the second half of the year. The auto industry is also overcapacity, only to see if the infrastructure can drive some steel demand, but this also It depends on the specific situation of local debt disposal."

       But on the whole, steel prices may be similar to last year, and a balance is struck between tight supply and weak demand. If supply capacity shrinks more on the supply side, steel prices are likely to remain high. In this way, the performance and profit margin of steel enterprises in the second half of the year may continue to perform well. "If the tension on the supply side is not as great as the weakening of demand, then not only will the price of steel be suppressed, but the price of raw oil such as iron ore and coal coke in the upstream will also be suppressed."

       In the view of Pan Hanxiang, a researcher at the Yimei Coal Research Institute, the coal industry is about to enter the off-season of coal use in the fall, and demand is weak, coupled with high downstream inventory, coal prices will face a 'stagflation' in the short term. However, with the start of high-pressure environmental protection and peak production, the overall trend of the coal market in the second half of this year may remain volatile and weak.

       Meng Xiangwen, an analyst at Shenwan Coal, said that the northeast region is about to enter the heating season in October. Due to the lack of coal last year, this year began to purchase winter coal in the Bohai Rim region. The northeast demand will drive the coal price in the Bohai Rim region. However, the overall thermal coal is not as good as coking coal. “The coking coal price is relatively high due to a large proportion of long-term agreements and adopts quarterly pricing. In terms of fundamentals, coking coal prices are more rigid than thermal coal.”

       The only uncertainty is the situation of imported coal. In order to keep the supply-side reform dividend in the country, the state has restricted the import of coal from some ports. However, due to the strong demand for coal during the summer peak season, the cumulative import of coal in the first half of the year was 146 million tons, an increase of 13.391 million tons, an increase of 9.9%. Meng Xiangwen said that with the shortage of import quotas for coal demand enterprises in the southeastern coastal areas, and the superimposed exchange rate rise, it is expected that the imported coal will be greatly reduced in September, which will also boost domestic coal prices.