According to statistics, in the first half of the year, member steel enterprises of the China Iron and Steel Association achieved sales revenue of 1,799.8 billion yuan, a year-on-year increase of 0.94%; realized profits and taxes of 39.79 billion yuan, a year-on-year increase of 1.49%; after offsetting profits and losses, realized a profit of 2.267 billion yuan, with an average sales profit margin of only 0.13%, the lowest among all industrial sectors in the country.

　　Among them, 35 of the 86 member enterprises were loss-making, with a loss ratio of 40.7%. In June, due to continued declines in steel prices, member enterprises collectively suffered a loss of 699 million yuan after offsetting profits and losses, marking the first loss this year.

　　Zhang Changfu, vice chairman and secretary-general of the China Iron and Steel Association, told reporters that in the first half of the year, domestic steel demand was lower than output growth, causing steel prices to remain low. As the decline in iron ore prices was smaller than that in steel prices, production costs for enterprises remained high. With social and enterprise inventories of steel still at high levels, if steel output cannot be effectively controlled in the second half, the market oversupply situation will be difficult to alleviate.

　　Li Xinchuang, executive deputy secretary-general of the China Iron and Steel Association, told our reporter that eliminating outdated capacity is a lengthy process, and controlling output is the immediate priority. It may take 5-10 years to digest excess capacity. The current industry downturn is most likely to force two types of enterprises out first: those with broken capital chains and those with serious environmental non-compliance.

　　In the first half of 2013, the situation of China's steel industry remained unoptimistic. Although the industry as a whole still had meager profits, the operating conditions of enterprises did not improve much compared with last year.

　　According to statistics, 35 of the 86 member enterprises of the China Iron and Steel Association were loss-making, with a loss ratio of 40.7%. In June this year, the industry even saw overall losses for the first time.

　　Zhang Changfu introduced that the total profit increased by 30.4% this year, mainly due to the low base last year. Looking at monthly profits this year, there has been a month-by-month decline. At the same time, the number of loss-making enterprises has increased significantly, with the loss ratio up 3.5 percentage points from the same period last year.

　　From the perspective of profit composition, the 2.267 billion yuan profit realized in the first half includes 4.321 billion yuan of investment income and 3.88 billion yuan of net non-operating income and expenses. Excluding these factors, the main steel business still had substantial losses.

　　Data from the China Iron and Steel Association show that in the first half of the year, national crude steel output continued to grow, with daily output at a high level. National output of pig iron, crude steel, and steel products (including repeated materials) was 357.54 million tons, 389.87 million tons, and 516.96 million tons, respectively, up 5.7%, 7.4%, and 10.2% year-on-year, with growth rates 2.8, 5.6, and 4.1 percentage points higher than the same period last year.

　　In terms of inventories, steel inventories in major markets across the country remained high. At the end of March, inventories reached 19.97 million tons, and by the end of June they had dropped to 15.46 million tons. Although they declined continuously in the second quarter, they still increased by 3.58 million tons, or 30.13%, compared with the beginning of the year, basically flat compared with the same period last year.

　　Zhang Changfu said that considering the increase in both enterprise and social inventories, as well as the representativeness of the samples of enterprise and social inventories, the growth rate of actual crude steel consumption was lower than that of apparent crude steel consumption, and even lower than the growth rate of crude steel output.

　　Regarding the next priorities for the steel industry, Zhang Changfu stated that controlling output is the current focus. Enterprises should combine the national task of resolving overcapacity with their own production and operations, first eliminating unprofitable outdated capacity and decisively shutting down low-level capacity with severe losses, striving to achieve both the elimination of outdated capacity and reduced losses with increased efficiency.

　　In the second half of this year, steel enterprises will still face major difficulties and severe challenges in production and operations. Li Xinchuang told reporters that resource disadvantages, financial disadvantages, and environmental pressure are the biggest problems currently facing the steel industry.

　　Li Xinchuang introduced that the steel industry has low concentration and relies solely on price competition. In addition, the upstream industry chain is severely lacking. China's dependence on foreign iron ore is close to 70%, domestic ore costs are high, and major global ore supply regions are far from China, all of which contribute to the resource disadvantages of the steel industry, with steel profits transferred upstream.

　　Second, funding shortages have become a common problem for steel enterprises. In terms of corporate loans, "the loan interest rates for the vast majority of enterprises have not only not fallen but have risen, creating a financial disadvantage where all the money earned goes to the banks," Li Xinchuang said.

　　Data show that at the end of June, bank loans of key statistical steel enterprises increased by 105.156 billion yuan year-on-year, up 8.8%, of which short-term loans increased by 112.554 billion yuan, up 13.65%; long-term loans decreased by 7.399 billion yuan, down 2%. Both accounts receivable and accounts payable increased year-on-year, with accounts receivable up 1.962 billion yuan and accounts payable up 21.43 billion yuan.

　　In addition, as national policies on industries with overcapacity are further clarified, the elimination of outdated capacity will be accelerated, and energy conservation and environmental protection supervision will become stricter. Most steel enterprises will face new requirements for higher emission reduction and consumption standards, and some enterprises may even feel the crisis of being phased out.

　　Li Xinchuang introduced that currently, enterprises with good environmental protection performance have environmental costs of 150-160 yuan per ton, while those with poor performance have costs of only 20-30 yuan.

　　If outdated capacity elimination is not handled well, those with tight capital chains may be the first to fall. Therefore, do not just compare products and efficiency, but also compare environmental protection. Promote industry transformation and upgrading through environmental protection, so that poor enterprises will naturally be eliminated.