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Development Direction of China Iron and Steel Industry

At this stage of our country is in the late stage of industrialization development, huge demand for steel, the steel industry is facing a larger market space. As shown below, in the first half of 2007-2011, the assets and sales scale of China's steel industry showed a steady growth trend. In the first half of 2011, the total assets of China's iron and steel industry reached 4.8664 trillion yuan, an increase of 16.41% over the same period of last year. The accumulated sales revenue reached 3.27 trillion yuan and a year-on-year increase of 28.96%.
 
The one hand, the continued expansion of the scale brought by China's steel demand, on the other hand, the overall Chinese steel industry is at a marginal level. The foresight believes that the reason for the decline in the average profit margin of the steel industry is mainly the overcapacity of steel and ore price hikes.
 
March 23, 2010 BHP Billiton and Japanese mills to reach quarterly pricing agreement, run for 40 years Long Association model was scrapped. China's steel prices were forced to accept quarterly pricing, monthly pricing, spot pricing and other pricing models, iron ore prices continue to rise. In 2010, the three major mines made a total net profit of 48 billion U.S. dollars, 3.5 times the profit of China's steel industry.
 
The first half of 2011, BHP Billiton, Vale and Rio Tinto announced the results show that the three companies were net profit of 13.1 billion, 13.3 billion and 7.6 billion respectively, again bumper harvest. According to the National Bureau of Statistics data show that in the first half of 2011 China's steel industry profits of only 80.5 billion yuan. The former is nearly three times the latter. As the iron ore prices, the first half of 2011, Chinese steel prices more than the cost of imported iron ore 160.17 billion US dollars. China's steel enterprises need to speed up their efforts to get rid of iron ore constraints. Steel companies need to speed up the extension to upstream areas and at the same time increase efforts in overseas mining. In this regard, WISCO and Baosteel have achieved good results.
 
China's steel overcapacity, irrational industrial structure, but also lead to the meager profits of the steel industry, the main reason. During the 12th Five-Year Plan, the steel industry will eliminate 75 million tons of backward ironmaking capacity and 48 million tons of backward steelmaking capacity. At the same time, the reorganization and integration of steel enterprises within the region have also escalated once again. Hebei, Shandong, Guangdong and Liaoning have formed steel groups in the region.
 
Experts predict that by 2014, the situation of a serious shortage of iron ore in China will be improved; by then, the merger and acquisition of iron and steel enterprises will also come to an end. It is estimated that the profitability of China's steel industry will rebound as a whole at the end of the 12th Five-Year Plan.

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