The Riddle of "high-end surplus": the source of stainless steel industry downward

May 16, Baosteel Chairman Lejiang in Lujiazui Forum, "The two years of global stainless steel industry lost very miserably, Baosteel also lost very miserably", opened the Chinese stainless steel industry worries. Lejiang the stainless steel industry's downward blame on the financial industry hype. "It's not that we're not doing a good job," but because "stainless steel has nickel for raw materials", "The London Financial futures market in 2007 fried nickel to $52000/ton, and to 9000 dollars/ton by the end of 2008, and historically, nickel has never been higher than 26000 dollars per ton."　　At this time, the stainless steel industry can no longer operate according to their own rules.　　But the problem with China's stainless steel industry is not just due to the financial sector's involvement, says one of Baosteel's top insiders. "Overcapacity is an important reason.　　"The people even think that the" price "factor has limited impact," the stainless steel industry is a little special, these years regardless of price, downstream demand is not bought. " He stressed that "the current demand for limited production, the elimination of backward capacity is already the old topic, but the same advanced capacity of excess, stainless steel is a typical example."　　"In fact, Lejiang has also reflected on this," the national steel industry 650 million tons of capacity, not only backward overcapacity, advanced production capacity is also surplus. The continuous loss from the second half of 2007, stainless steel business became a stake in Baosteel (600019.　　SH) A loss source in the financial statements.　　Baosteel's 2007 earnings show that in 2007, Baosteel's net profit fell 1.2 billion yuan from the previous year, and its stainless steel business lost 2.2 billion yuan in the second half of the year. 2008, Baosteel's net profit fell 57% year-on-year, stainless steel business also declined. Among them, stainless steel plate volume loss of 1.406 billion yuan a year.　　In particular, the four-quarter, stainless steel settlement price, compared to the previous three-quarter average settlement price significantly reduced by 49%. Baosteel Management told the reporter, Baosteel stainless steel business continued to lose, nickel raw material price fluctuations is indeed one of the important reasons.　　"Baosteel in the nickel price at the peak of 50,000 to 80,000 U.S. dollars/ton, a large number of nickel, then the nickel price fell more than 50%", in 2007, only in raw material prices plummeted loss of profits, "Baosteel on the loss of more than 2 billion".　　and steel industry plate, wire and other varieties of the situation compared to the loss of stainless steel business, it seems more common and long. May 12, the world's second largest stainless steel producer, Finland Otokun Pu company, also reported losses in the earnings.　　In the first quarter of 2009, corporate profits fell to a net loss of € 187 million on the basis of a profit of € 63 million last year. Outlook forecast Otokun also said that global demand and prices for stainless steel remained low in the first quarter of 2009, with a 25% per cent reduction in apparent consumption of stainless steel globally over the same period last year. A report by the International Stainless Steel Forum (ISSF) also shows that 2009, the global demand for stainless steel is expected toFall by 9%, 2010 years to 3% growth.　　My steel net stainless steel industry analyst Li Pan said that at present, the degree of stainless steel loss, has been walking in front of most other steel varieties. May 19, Baosteel Stock Sales Center General manager, China Special Steel Enterprise Association stainless Steel branch president Lou Dingpo also said to our correspondent: "The double extrusion of the upstream and downstream industries, the production and operation of stainless steel enterprises brought great pressure, from the second half of 2008, most of the domestic stainless steel enterprises are losing money."　　"The prospect of the stainless steel industry can be glimpse from the circulation channels."　　Lou Dingpo, general manager of Baosteel Stock Sales center, said since the beginning of April, the stainless steel sheet market has been continuously warmed up, the downstream transactions gradually magnified, from the 2009 Canton Fair has released the information, the international market has also shown a gradual warmer signs, but he still said, "for us, can not be blind optimism." Tianjin Sanjiang Tongda High Pressure pipe Trading company in charge of stainless steel pipe Department Jia Tongming told our correspondent, "Now the demand is still very cold, earlier we more than 20,000 yuan/ton of the price of 2000 tons of goods, has been pressed in the warehouse." "Jia Tongming said, the industry on this, next year's stainless steel trend basic look empty," from Jiangsu, Ningbo area, there have been several smelting enterprises began to stop production, but also some enterprises gradually began to transition from stainless steel to alloy steel or other fields. "Although the price of stainless steel has recently rebounded. Last week, TISCO 304 stainless steel cold rolled 17200 yuan/ton, higher than the previous 200 yuan/ton. But Jia Tongming told reporters that the main steel mills have indeed improved the weekly pricing, however, traders are mostly "afraid to pick up".　　In his view, with the price of nickel downward, "stainless steel price return to the line of the day is not far." "High-end" excess for the stainless steel industry in the two years of continuous downward, Lejiang in Lujiazui Forum said, "I can not explain, I hope the financial industry to explain the friend."　　In his view, the global stainless steel has been lost, "not that we do not do a good job", but the financial industry accounted for the main responsibility, financial and industrial should be "harmonious development."　　Mr Shan, secretary general of China Iron and Steel Industry Association, also believes that stainless steel 2009 years of sustained losses, the direct reason is "raw material prices are too high."　　But Baosteel executives stressed that high-end stainless steel products are not sold, indicating China's lack of consumer support for high price steel products, at the same time, "overcapacity is an indisputable fact that the status of the stainless steel industry reflects that the structure of the Chinese steel industry is not generally serious." Jia Tongming also to this reporter pointed out, Jiangsu and Zhejiang and other land has formed a stainless steel market warlords pattern.　　"We will eat the goods in Jiangsu and Zhejiang, the quality and Baosteel, too steel similar, but Baosteel, Tisco price more expensive." According to "My Steel Net" statistics, currently, China's stainless steel plate, strip existing capacity of more than 13 million tons, and the actual release of the production of only 6.9 million tons. "This shows that capacityThe utilization rate is so low that nearly half of the capacity is idle.　　"My steel net stainless steel industry analyst Li Pan said. China Special Steel Enterprise Association stainless Steel branch of the Executive Director Li Licheng also said, and Japan, Korea, Taiwan, Europe and other fields, China's overall production capacity of stainless steel, far more than the reality of their own consumption capacity.　　If you take into account the stainless steel inventory and its downstream products of net exports, China's current actual consumption of stainless steel, should be lower, and overcapacity will be more obvious. In this respect, senior Baosteel said that stainless steel is a high value-added products, and high value-added products overcapacity, more than the release of backward production capacity more serious. "This is a big blow to large enterprises, because of high-end products depreciation fees, production costs more expensive, therefore, high-end products in the absence of market demand, the expansion of production, duplication of production, more waste of resources than low-end products, will also cause greater losses." "" In the case of conspicuous overcapacity and intense market competition, it is necessary to strictly control the construction of new capacity. "said Li.