On December 9, Baosteel reorganized Fujian Desheng Nickel Industry. On the 14th, Guangzhou Iron and Steel Co., Ltd. stated that it is negotiating with Guangri Group to restructure. On the 15th and the 16th, *ST Vanadium Titanium and Three Steels dawn announced in succession that they would reorganize with Anshan Steel. This series of reorganization events at the end of the year will enable the bear steel industry sector to welcome the opportunity of turning over salted fish next year.
In 2010, for the iron and steel industry, it was extremely depressing: there was pressure from real estate regulation and control, and the pursuit of high-priced iron ore was followed by a fierce “limited production and limited production†storm. According to the latest data disclosed by Luo Tiejun, Deputy Director of the Department of Raw Materials of the Ministry of Industry and Information Technology, the average profit rate of the raw material industry this year is 6%, the highest in the coal industry is over 14%, and the lowest is the steel industry, only 3.5%.
Under such circumstances, the capital market has repeatedly abandoned steel stocks: As of the 21st, the Shanghai Composite Index fell by about 10% from the beginning of the year, while the steel plate index fell by 25% over the same period, and underperformed the market by 15 percentage points. Valin Steel and Anyang Iron and Steel have successively broken the net, and Anshan Iron & Steel Co., Ltd. was unfortunately shortlisted as the most bearish stock of the year. The steel sector is an absolute valuation of A shares.
However, in the midst of winter, new hopes are also gestating. These reorganization events at the end of the year are signs: some of them start with resources. If Baosteel reorganizes Desheng Nickel, it will solve the key nickel raw material issue for stainless steel production. Anshan Iron & Steel plans to exchange assets with *ST Vanadium and Titanium to inject hot iron ore resources into listed companies.
Some start with controlling shareholders. For example, Sangang Shuguang stated that after the restructuring plan has been approved by the Ministry of Industry and Information Technology, the actual controller of the company will be changed from Fujian Metallurgical Holding Group to Anshan Iron and Steel Group. Although there is excess steel production capacity in the country, steel products in Fujian Province cannot be self-sufficient. There is no lack of market in the dawn of the Three Steels. What is lacking is resources and technology. The marriage with Angang will make up for this shortfall.
Some are simply planning to give up the main business of not making money. Such as the reorganization of Guangzhou Iron and Steel shares, is the backbone company of South China escalator Guangri Group. If the two exchanged assets, Guanggang Steel was completely reshaped.
In addition to industry restructuring, there is hope for a warmer macroeconomic policy. Luo Tiejun said that the "Twelfth Five-Year Plan" is a strategic opportunity period for the adjustment of China's urban steel plant layout, and it is one of the trends toward "coastal" development. He also mentioned the once blocked Wugang Fangchenggang base. “Now Japanese and Korean steel mills such as Pohang have invested in Vietnam and started the layout adjustment project like Fangchenggang as soon as possible, not only to meet domestic demand, but also to further radiate the ASEAN market.â€
Industry experts have also made suggestions for the steel industry to improve profitability. Li Shijun, chief analyst of China Iron and Steel Association pointed out that the steel industry chain includes product development, raw material procurement, steel production and processing and distribution, and many other links. Now that smelting links are difficult to make money, they can find solutions from other aspects.
“Like logistics is an important part of it. At present, China's steel industry is very fragmented, and steel prices have caused great disruptions to production and consumption,†said Sheng Zhicheng, deputy secretary-general of the China Logistics and Purchasing Federation’s steel logistics professional committee. By using IT technology to eliminate information asymmetry in the steel pipeline and improve logistics efficiency, steel mills can be more focused on production research and energy conservation and emission reduction.
However, Luo Tiejun pointed out that although China's steel production and consumption will both increase in 2011, it is expected that the rate will be small, and the occurrence of “business mutation†is less likely. However, he also stressed that as long as the continuity and stability of the existing industrial policies are maintained, “in the two to three years, the structural adjustment of the steel industry must have resultsâ€.
In 2010, for the iron and steel industry, it was extremely depressing: there was pressure from real estate regulation and control, and the pursuit of high-priced iron ore was followed by a fierce “limited production and limited production†storm. According to the latest data disclosed by Luo Tiejun, Deputy Director of the Department of Raw Materials of the Ministry of Industry and Information Technology, the average profit rate of the raw material industry this year is 6%, the highest in the coal industry is over 14%, and the lowest is the steel industry, only 3.5%.
Under such circumstances, the capital market has repeatedly abandoned steel stocks: As of the 21st, the Shanghai Composite Index fell by about 10% from the beginning of the year, while the steel plate index fell by 25% over the same period, and underperformed the market by 15 percentage points. Valin Steel and Anyang Iron and Steel have successively broken the net, and Anshan Iron & Steel Co., Ltd. was unfortunately shortlisted as the most bearish stock of the year. The steel sector is an absolute valuation of A shares.
However, in the midst of winter, new hopes are also gestating. These reorganization events at the end of the year are signs: some of them start with resources. If Baosteel reorganizes Desheng Nickel, it will solve the key nickel raw material issue for stainless steel production. Anshan Iron & Steel plans to exchange assets with *ST Vanadium and Titanium to inject hot iron ore resources into listed companies.
Some start with controlling shareholders. For example, Sangang Shuguang stated that after the restructuring plan has been approved by the Ministry of Industry and Information Technology, the actual controller of the company will be changed from Fujian Metallurgical Holding Group to Anshan Iron and Steel Group. Although there is excess steel production capacity in the country, steel products in Fujian Province cannot be self-sufficient. There is no lack of market in the dawn of the Three Steels. What is lacking is resources and technology. The marriage with Angang will make up for this shortfall.
Some are simply planning to give up the main business of not making money. Such as the reorganization of Guangzhou Iron and Steel shares, is the backbone company of South China escalator Guangri Group. If the two exchanged assets, Guanggang Steel was completely reshaped.
In addition to industry restructuring, there is hope for a warmer macroeconomic policy. Luo Tiejun said that the "Twelfth Five-Year Plan" is a strategic opportunity period for the adjustment of China's urban steel plant layout, and it is one of the trends toward "coastal" development. He also mentioned the once blocked Wugang Fangchenggang base. “Now Japanese and Korean steel mills such as Pohang have invested in Vietnam and started the layout adjustment project like Fangchenggang as soon as possible, not only to meet domestic demand, but also to further radiate the ASEAN market.â€
Industry experts have also made suggestions for the steel industry to improve profitability. Li Shijun, chief analyst of China Iron and Steel Association pointed out that the steel industry chain includes product development, raw material procurement, steel production and processing and distribution, and many other links. Now that smelting links are difficult to make money, they can find solutions from other aspects.
“Like logistics is an important part of it. At present, China's steel industry is very fragmented, and steel prices have caused great disruptions to production and consumption,†said Sheng Zhicheng, deputy secretary-general of the China Logistics and Purchasing Federation’s steel logistics professional committee. By using IT technology to eliminate information asymmetry in the steel pipeline and improve logistics efficiency, steel mills can be more focused on production research and energy conservation and emission reduction.
However, Luo Tiejun pointed out that although China's steel production and consumption will both increase in 2011, it is expected that the rate will be small, and the occurrence of “business mutation†is less likely. However, he also stressed that as long as the continuity and stability of the existing industrial policies are maintained, “in the two to three years, the structural adjustment of the steel industry must have resultsâ€.
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