Li Xinchuang: Is there a good day for the good price of the steel industry?

A few days ago, Li Xinchuang, president of the Metallurgical Planning Institute, accepted an interview with CCTV Finance and explained some issues in the industry.

Moderator: On a monthly basis, this year's steel comprehensive price index is significantly higher than the same period last year. Will this trend continue? Will the steel price this year be a step higher than last year?

Dean Li: First of all, I would like to say a few points: the steel comprehensive price index has risen from 126 points last year to the present. On the whole, China's steel prices are actually gradually decreasing slowly from the previous month and slightly increasing from the same period of last year. From an industry perspective, we are not in favor of the ups and downs of steel prices. From the current price point of view, the statement that the profit per ton of steel reaches 1,000 yuan is unscientific and incomplete. This is just a simple gross profit, without depreciation, interest, etc. . According to statistics, the actual net profit per ton of steel in the first four months of this year was only 345 yuan. Among the 88 steel enterprises in the statistics, there are 69 companies with a profit of more than 100 yuan per ton of steel, and 19 with a profit of less than 100 yuan per ton of steel. Therefore, the actual profit of tons of steel is not so high, this is the first point of view. The second point of view is that we must not only care about the price of steel, but also the actual benefits of the industry. The actual benefits of the industry need to be measured by the profit margin of sales. In the past few years, the industry was in a difficult period. In 2017, the whole industry improved, but the sales profit rate was only 4.8%, while the average sales profit rate of China's industrial sector was 6.46%. So far this year, the industry average sales profit rate can reach 6% or more. .

Moderator: From the average sales profit rate statistics, the industry sales profit rate in 2008-2016 is only 1.14%, and in 2017 it was 4.8%, although it is still low compared with the industry's sales profit rate of 6.46% in that year, but from In terms of industry benefits, is it also growing at a high speed?

Dean Li: As the most important pillar industry in China, I personally think that the current steel prices are relatively reasonable. If it is too low, the industry will be in a state of loss, so the current steel price cannot be compared with the past loss period. In addition, we must pursue the reasonable profits of the industry, but also consider further development. Therefore, the downstream industry should have an objective mentality, and the industry's own mentality should also remain healthy. As a capital-intensive industry, the industry needs reasonable profits. Healthy development of the industry. As of today, despite the effective progress of the industry's de-capacity, the deleveraging work has just begun. Even though the current evaluation of steel prices and good profits in the society, the industry debt ratio is still as high as 67%, which is higher than the debt ratio of the entire industrial sector by 11 percentage points. Therefore, the future development of the industry is still very long.

Moderator: From the steel comprehensive price index, what is the level at which it can reach the profit and loss point?

Dean Li: The lowest point of the steel comprehensive price index this year is 108 points. At 108 o'clock, the whole industry will be in a relatively tight state. From an ideal state, it may be relatively reasonable between 110 and 120 points. If the steel composite price index is higher than 120 points or the price exceeds 5,000 yuan / ton, then the downstream industry may have more objections.

Moderator: In the first four months of this year, the total profit of industrial enterprises above designated size increased by 15% year-on-year, but the total profit of ferrous metal smelting and rolling processing industry increased by 95.4% year-on-year. How long does this high growth rate last for steel? The price has been maintained in the current range?

Dean Li: From January to April last year, although the company's benefits were better than 2016, it did not reach a better level. After the second half of last year, the company's profit margin has improved significantly. The industry is only 4.8. % sales profit margin. In the first four months of this year, the company's profit margin was higher than last year. The first is based on the low base last year. In addition, according to the judgment of the future, one is the market factor, and the market is affected by the de-capacity and is at a reasonable level. At the same time, there is a very important factor, that is, environmental protection and limited production. Last year, after the environmental protection and production restriction work achieved good results in “2+26” cities, it is now spreading to other regions. In addition, some of China’s more important conferences, such as the Qingdao Shanghe Summit, will also be restricted. Production impact. The impact of limited production includes two aspects, affecting both the production enterprise and the market, including construction sites.

Moderator: In the end, how good and green is the environmental protection, can we call the industry really a "good day"?

Dean Li: The industry must keep a clear head on "good days". The first challenge facing the industry is environmental pressure. During the two years of 2016 and 2017, China's industry has already withdrawn 120 million tons of production capacity, and also banned 140 million tons of “strip steel”. It is very important in the process of dissolving excess capacity and banning “strip steel”. One standard is environmental standards. As the requirements of the entire ecological environment continue to increase, we are increasingly demanding environmental protection for the entire society, and the environmental requirements for the industrial sector that we represent are even higher. Therefore, the industry can not simply say that it is a "good day" because the environmental pressure is very large, such as the environmental protection and production restrictions mentioned just now. China has the best companies that can meet environmental standards, and quite a few companies do not meet the standards. This is the challenge. The standards we have mentioned include national standards, local standards, and recently issued ultra-low emission standards. Taking the sintering process as an example, the ultra-low emission standards for sintering flue gas require: particulate matter less than 10mg/m3, SO2 less than 35mg/m3, NOx Less than 50mg/m3, this can be called the most stringent standard in the world. At present, some enterprises in China have been able to achieve ultra-low emission standards, such as Handan Steel, which has a particulate matter concentration of only 1.8 mg/m3 and a SO2 emission concentration of less than 8 mg/m3. China's Baosteel, Taigang, Tangshan Iron and Steel, Handan Iron and Steel and other outstanding state-owned enterprises, as well as a number of private enterprises, environmental protection work has done very well. For example, Xingtai Delong has been rated as a national 3A-level tourist scenic spot, and its emission standards have completely exceeded the national ultra-low emission standards. In the future, the industry's environmental protection pressure will continue to increase, and at the same time to meet the requirements of low-carbon development, green and intelligent is an important starting point for China's high-quality development, transformation and upgrading of the industry, so the industry and enterprises can not be taken lightly, simply think that it has passed "Good day."

Moderator: The high-quality development of the industry and the long-term development of corporate profits, is it required to produce good steel?

Dean Li: As a material, its market is divided into different levels. China's high value-added steel products export more than the import volume, such as more than 2,000 US dollars a ton of steel, China's export volume is 1.5 times the import volume; more than 1,000 US dollars a ton of steel, China's export volume is the import volume 2.5 times. Therefore, China's industry is generally improved, not only the middle and low-end products are competitive, but also the high-end products are competitive.

Moderator: The current industry has ushered in a good price, but a good price is not equal to a good day. What do you think is the standard for a good day?

Dean Li: First of all, we must change the society's views on the industry and make the city and the world better. This is manifested in two aspects: first, the manufacturing process is greener and lower carbon; second, the industry can produce more high value-added steel products that meet social needs through technological advancement and intelligent manufacturing, making the world a better place. Make the city a better place.

Moderator: At present, the industry's high total profit growth rate is year-on-year. How much is it dependent on good products? Are there other factors that are driving up the price of steel?

Dean Li: I don’t think it’s just a matter of simply paying attention to the price of steel, but about the benefits of the industry. To make the world and the city better, the industry needs to rely on efficiency to support it. Without benefits, there will be no green development, industrial upgrading, technological advancement and intelligent manufacturing. For enterprises, in addition to paying attention to steel prices, we must also pay attention to the ability of enterprises to continue to develop, so that enterprises can be better.

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