As the most important internal meeting of the steel industry, heads of nearly a hundred domestic steel enterprises, including Baosteel, Hebei Iron and Steel, Shougang, Ansteel and Shandong Iron and Steel, all attended. Regarding the issue of the entire steel industry being mired in a loss-making “strange circle,” Xu Lejiang admitted that the steel industry is still at the lowest level among industrial sectors. In the first half of the year, the 86 member steel enterprises included in the statistics achieved a cumulative profit of 2.27 billion yuan, which also included about 1.5 billion yuan in profit generated by enterprises changing accounting policies and reducing depreciation provisions; actual sales profit income was even less.

　　It is worth noting that Xu Lejiang pointed out that in addition to the further expansion of enterprise losses, the divergence among enterprises is also very obvious. In the first half of the year, 35 enterprises incurred cumulative losses, with a loss ratio as high as 40.7%, an increase of 3.49 percentage points year-on-year. Among the member steel enterprises in the first half of the year, the top 10 profitable enterprises achieved a cumulative profit of 9.865 billion yuan, while the top 10 loss-making enterprises had cumulative losses of 9.125 billion yuan. Among them, the sales profit margin was only 0.13%, far below the national average sales profit margin of 5.4% for industrial enterprises above designated size.

　　“The profit from selling a ton of steel now cannot buy a popsicle. For steel enterprises at present, it is ‘torment.’ If the steel industry made some fat when the situation was good a few years ago, it is now being slowly squeezed dry,” Xu Lejiang told reporters. He admitted that in the first half of the year, in order to protect market share and prevent banks from stopping loans, enterprises released output at a high level, causing industry operations to show a cycle of “price rise—output increase—price fall—output cut,” putting pressure on steel prices. The latest data from the China Iron and Steel Association show that in the first half of the year, the entire industry produced 390 million tons of crude steel, up 7.4% year-on-year, with daily crude steel output as high as 2.154 million tons. Based on this, national steel output is estimated to reach 786 million tons, but apparent crude steel consumption during the same period was 364.8 million tons, up 6.8% year-on-year. “If inventory changes are taken into account, one will find that output growth was mainly absorbed by exports and inventory growth, which intensified the contradiction between market supply and demand and suppressed steel prices,” he said.

　　On the other hand, iron ore prices remain high, and the sharp drop in steel prices has also made enterprise operations extremely difficult. Xu Lejiang pointed out that in the first half of the year, the average price of imported iron ore was as high as 133.24 US dollars per ton, down only 6.25 US dollars per ton year-on-year, equivalent to a decrease of 10 US dollars per ton in hot metal cost, or 62 yuan, while at the end of June steel prices had fallen 16.96% year-on-year, with steel falling by more than 400 yuan per ton. The decline in iron ore was far from enough to offset the profit loss caused by the drop in steel prices, and Chinese steel enterprises still have not changed the situation of “working for the three major mines.”

　　“Steel demand will not grow rapidly in the second half of the year.” Xu Lejiang said. He believes that the policies successively introduced by the central government since July still focus on building an upgraded version of the Chinese economy through deepening market-oriented reforms, and it is impossible for large-scale investment stimulus policies to be introduced. Steel demand cannot grow rapidly in the second half of the year, and judging from the quarterly pattern of recent years, output and demand in the second half may even be lower than in the first half. On the other hand, the global economic recovery is slow, steel export difficulties are increasing, and declining demand and sluggish prices are common difficulties facing the global steel industry.

　　What worries him is that by the end of the year, more than 20 million tons of crude steel capacity will still be put into operation. At the same time, the situation of difficult financing and high costs will not change, and prices of raw materials such as iron ore, affected by small-sample indices, are prone to rise rather than fall. With multiple factors intertwined, the industry will still operate at thin profit in the second half of the year.