China's steel industry in slow recovery (2)

Slow growth in production

As the destocking process of steel industry is not completed yet, the steel production remains to meet slow growth. After a preliminary seasonal adjustment, China's crude steel production was 161.703 million tons in the fourth quarter, with a year-on-year growth of 2.9 percent, and the year-on-year growth rate increased 0.6 point compared with the previous quarter, and decreased 9.6 percent quarter to quarter while the quarter to quarter increase of the previous quarter was 3.0 percent.

Sales meet a mild rebound

In the fourth quarter, being affected by the mild rebound of the real estate market and other factors, the steel market also showed little warmth. The main business income of China's iron and steel industry was RMB1.71418 trillion Yuan, with year-on-year growth of 3.7 percent, and the previous quarter decreased by 0.4 percent year on year; and it declined by 0.4 percent quarter to quarter, while the quarter-to-quarter decrease was 2.3 points.

Price decline trends to be slow

The sales recovery of the steel products alleviated the dropping trend of steel prices to some extent. In the fourth quarter, the cost price of the steel industry product dropped by 11.9 percent year on year, and the decreasing rate narrowed by 2.8 points compared with the previous quarter.

Destocking accelerated

Being constrained by the surplus production capacity, the mild rebound in the market accelerated the process of destocking. As of the end of the fourth quarter, the finished products funds of steel industry was RMB244.94 billion Yuan, decreasing RMB13.66 billion Yuan compared with the previous quarter; funds for finished production rose by 4.6 percent year on year, and the year-on-year growth rate declined by 10.3 points compared with the previous quarter.

The decline range of export narrowed

In the fourth quarter, China's steel exports continued to maintain a decline trend, but the decline rate has narrowed. After a preliminary seasonal adjustment, the steel export of the fourth quarter was US$12.86 billion, dropping by 1.2 percent year on year.

Profits switched to increase from decline

In the fourth quarter, being affected by the sales recovery, decreased costs and other factors, the profits of the steel industry switched to a mild increase from the a significant year-on-year decline in the previous quarter. After a preliminary seasonal adjustment, the total profit of the steel industry in the fourth quarter was RMB39.91 billion Yuan, with a year-on-year growth 6.4 percent, while it decreased by 84.1 percent year on year in the previous quarter; the quarter-to-quarter growth has exceeded 5 times, and the quarter-to-quarter decreasing rate of the previous quarter was 84.1 percent. In the fourth quarter, sales profit rate of the steel industry was 2.3 percent, rising 2.0 points compared with the previous quarter, but it was still significantly lower than the 6.5 percent of national industrial average profit rate on sales.

After a preliminary seasonal adjustment, the total loss of the deficit enterprises in the steel industry was RMB18.6 billion Yuan, which decreased by RMB5.36 billion Yuan compared with the previous quarter; the scale of losses was 21.8 percent, which was decreased compared with the 23.7 percent scale of losses of the previous quarter, and it was significantly higher than the 14.0 percent scale level of losses of all the industries.