As the most important internal meeting of the steel industry, nearly a hundred steel enterprise leaders, including Baosteel, Hebei Iron and Steel, Shougang, Ansteel, and Shandong Iron and Steel, attended. Regarding the issue of the entire steel industry being deeply trapped in a loss-making “vicious cycle,” 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 includes about 1.5 billion yuan of profit generated by changes in accounting policies and reduced depreciation, and the actual sales profit is even less.

　　It is worth noting that Xu Lejiang pointed out that in addition to the further expansion of the loss scope, the divergence among enterprises is also very obvious. In the first half of the year, there were 35 loss-making enterprises, with a loss rate of 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 a cumulative loss 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, it is currently ‘torment.’ If the steel industry made some fat when the situation was good in previous years, 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 the market and prevent banks from stopping loans, enterprises released production at a high level, causing the industry to operate in a cycle of “price rise — production increase — price fall — production reduction,” putting pressure on steel prices. The latest data from the China Iron and Steel Association shows that in the first half of the year, the whole industry achieved a crude steel output of 390 million tons, an increase of 7.4% over the same period last year, with daily crude steel output as high as 2.154 million tons. Based on this, the national steel output is expected to reach 786 million tons, but the apparent consumption of crude steel in the same period was 364.8 million tons, a year-on-year increase of 6.8%. “If inventory changes are considered, it will be found that the growth in output is mainly absorbed by exports and inventory growth, which has 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 made business operations extremely difficult. Xu Lejiang pointed out that in the first half of the year, the average import price of iron ore was as high as $133.24 per ton, a year-on-year decrease of only $6.25 per ton, which translates to a reduction in hot metal cost of $10 per ton, or 62 yuan, while at the end of June, steel prices fell by 16.96% year-on-year, with steel prices dropping by more than 400 yuan per ton. The decline in iron ore prices is far from compensating for the profit loss caused by the drop in steel prices. 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 introduced by the central government since July are still focused on deepening market-oriented reforms and creating an upgraded version of the Chinese economy. It is impossible to have large-scale investment stimulus policies. Steel demand in the second half of the year cannot grow rapidly. Judging from the quarterly patterns of recent years, output and demand in the second half of the year may even be lower than in the first half. On the other hand, the global economic recovery is slow, steel exports are becoming more difficult, and declining demand and low 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 be put into production. At the same time, the situation of difficult financing and high costs will not change. Prices of raw materials such as iron ore are affected by small sample indices and are prone to rise but not fall. With multiple factors intertwined, the industry will still operate with meager profits in the second half of the year.