Steel industry continues to slump

Chinese steel companies still face the problem of low-value-added processing plants. The profit margin of companies that do not have independent raw material supplies will not expand. Instead, there is a risk that the loss of stock raw material assets caused by the potential decline in the prices of major raw materials in the future will increase. The serious excess of steel-making capacity resulting from the pursuit of GDP, and the decline in the profitability of unit products have gradually emerged; under the continuous release of new production capacity by 80 key steel enterprises, the capacity utilization rate continues to decline, and losses continued in 2013.

For the Chinese steel industry, the end of 2007 to August 2008 is the booming point for the entire industry, due to the negative impact of the global financial crisis that started in September 2008 on the global economy, the increase in raw material prices caused by the global over-currency, and steel products. The reduction in steel rolling processing costs caused by the release of production capacity has caused the iron and steel industry to be in a state of declining economic climate. We expect that in 2013, China’s key steel companies and listed companies are still in a sluggish economy in the winter, there will be no big improvement. The real harsh winter of the steel industry has yet to come. The shortage of hand-held orders in steel downstream industries such as shipbuilding, machinery, and automobiles indicates that the low demand for steel products has not yet arrived.

The listed companies in the steel industry, which are already in a declining economy, do not have long-term investment value. Even if the leading stocks no longer fall in fear, they will only have short-term oversold bounce trading opportunities, or long-term low side volatility. The individual stocks that are regrouped into large groups do not reflect the characteristics of flexible operation of "Shortship Head Start". Market share price and profitability are worse than before.

The first increase in the steel sector on a certain day has often become a reverse indicator of the market.