Relevant experts pointed out that an important reason for the slowdown in profit growth in the steel industry is the increase in the price of raw materials such as iron ore.

Under the overall positive trend of the global steel industry, the development of China's steel industry in recent years has not been smooth. Industrial mergers and acquisitions and iron ore prices are two important factors that affect the development of the steel industry.

The concentration of steel industry has declined since 2007

Although the merger and reorganization of my country's iron and steel industry has been in progress, the progress is very slow compared with the mergers and acquisitions in the international market that cost tens of billions of dollars at every turn. In January 2007, Baosteel's acquisition of Bayi Iron and Steel was the first case of market-oriented industrial integration, which opened the prelude to the "big drama" of mergers and acquisitions in China's steel industry in 2007.

Although the merger and reorganization of my country's steel industry is in full swing, the "prosperity" scene cannot cover up the existing problems. The main purpose of the Chinese government's encouragement of mergers and acquisitions in the steel industry is to increase the concentration of the industry, but it seems to have little effect at present. Since 2007, the concentration of China's steel industry has continued to decline. Taking the first half of 2007 as an example, the steel production of 21 large enterprises with an annual output of more than 5 million tons of steel accounted for 50.54% of the total steel output, a decrease of 2.05% compared with the same period in 2006; The output growth of enterprises was 14.52%, which was 4.34 percentage points lower than that of the whole industry; while the steel output of local small and medium-sized enterprises increased by 36.8% during the same period, which was 17.89 percentage points higher than that of the whole industry.

Data show that the international benchmark price of iron ore rose by 19% and 9.5% in 2006 and 2007, respectively, while the increase in 2008 was as high as 65%. Iron ore is an important raw material for the steel industry, and the rise in its price has a great impact on the profits of the steel industry.

Rising iron ore costs weigh on profits

According to data released by the National Bureau of Statistics, from January to February this year, the national steel industry realized a year-on-year increase of only 12.2% in profits. According to the statistics of China Iron and Steel Association, from January to February this year, large and medium-sized steel enterprises realized profits of 22.563 billion yuan, a year-on-year increase of 20.41%, far lower than the 408% increase in the same period last year.

Experts pointed out that an important reason for the slowdown in profit growth in the steel industry is the impact of rising prices of raw materials such as iron ore.

"The price of iron ore continues to rise sharply, which increases the cost of the steel industry and compresses the profit margin of the steel industry. Small steel enterprises with backward production capacity are first on the verge of losing money. Due to the rapid rise in the cost of the steel industry, the price of steel has also shown an upward trend. , but the magnitude is not as fast as the cost increase." Analysts analyzed. "

Integration brings new impetus to industry development

According to my country's "Steel Industry Development Policy", by 2010, the steel output of the top ten domestic steel enterprises will account for more than 50% of the national output, and by 2020, this proportion needs to reach more than 70%. Zhang Xiaogang, chairman of the China Iron and Steel Association, said recently that my country has been vigorously improving the concentration of the steel industry, but the concentration has shown a downward trend year by year. 294% of the year. From this year to 2010, China's steel industry will usher in the largest wave of restructuring in history.

Industry experts said that the compression of industry profits caused by rising iron ore prices has forced the consolidation of the steel industry to further accelerate, driving the development of the industry.