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[interpretation of the SMM semiannual report] without fear of the impact of the epidemic, the smooth and excessive period is also a trough period. Why can this sub-industry turn red against the market?
Sep 2,2020 17:09CST
The content below was translated by Tencent automatically for reference.

SMM9, March 2: affected by the epidemic, since the beginning of this year, the economies of countries around the world have generally been impacted to varying degrees, and the iron and steel industry has basically maintained stable operation, but due to the rapid release of production capacity, severe and complex external environment, high iron ore prices and other factors, the economic benefits of the industry declined sharply in the first half of the year, and the operation of the iron and steel industry still faces many difficulties and challenges. According to the data, from January to June, the operating income of the ferrous metal metallurgy and Calendering industry reached 3.18604 trillion yuan, down 3.8 percent from the same period last year, while the total profit was 84.08 billion yuan, down 40.3 percent from the same period last year.

From the perspective of segment, the profit data of special steel and steel pipe industry are slightly stronger. According to Sino-Thai Securities data, in the three sub-industries of Pu Steel, Special Steel and steel pipe, steel pipe revenue is down 12.41% from the same period last year, and Pu Steel's revenue is down 4.70% from the same period last year. Special steel revenue is down 1.76% from the same period last year. The biggest decline in steel pipe revenue is mainly due to the continuous collapse of oil prices during the epidemic, which to some extent suppressed oil pipe prices and downstream demand. The decline in special steel revenue is the most limited compared with the same period last year, which once again highlights the strong ability of the special steel industry to withstand the cycle, especially the relatively stable prices of middle and high-end special steel varieties.

Among them, in terms of net profit data, ST Fugang performed most brightly in the first half of the year, with revenue of 3.107 billion yuan, an increase of 0.81% over the same period last year: net profit of shareholders belonging to listed companies was 183 million yuan, an increase of 46.07% over the same period last year. ST Fushun Special Steel Co., Ltd., the company's main business is the R & D and manufacture of special steel and alloy materials, and its main products are high temperature alloy, stainless steel, die steel, alloy structural steel and so on.

With regard to the operation situation in the first half of this year, ST Fugang said that in the first half of this year, in the face of a series of unfavorable conditions, such as tight supply of raw and auxiliary materials, reduced demand from downstream users, tight cash flow, and so on, brought about by novel coronavirus's epidemic, the company further improved its profitability through a series of measures, such as increasing product structure adjustment, strengthening basic management, adjusting marketing strategy, optimizing capital control, and improving product quality. Orders and output of key varieties such as superalloy and ultra-high strength steel have increased significantly compared with the same period last year, providing a strong support to the company's profitability, while the company's market recognition of high-end products has also been further improved.

The so-called special steel, that is, special steel, is a concept relative to general steel, which refers to iron and steel products with special physical and chemical properties or special uses because of their special composition, structure and production process. Because the production process of special steel is more complex and the technical level is higher, its products are of great significance to the national high-end manufacturing industry, such as high strength, hardness, plasticity, toughness, wear resistance, corrosion resistance and many other excellent properties.

In October 2019, the Ministry of Industry and Information Technology replied to recommendation No. 7404 of the second session of the 13th National people's Congress to promote the development of new iron and steel materials. We will start with new iron and steel materials, guide special steel enterprises to deeply participate in the construction of new iron and steel materials platform, and speed up the solution of some key steel material "sticking" problems through cooperation between the upstream and downstream of the industrial chain, so as to promote the development of special steel industry.

In addition, with the continuous growth of national investment in the seven major industries of "new infrastructure", China's special steel industry will also usher in opportunities for development, and many iron and steel enterprises have gradually begun to lay out, such as Citic Special Steel, which is known as the "special steel giant". At present, it has an annual production capacity of more than 13 million tons of special steel, and it is a high-quality special steel production base with large global steel coverage, full variety and many product categories.

For the future special steel market, ST Fugang said in its semi-annual report that the situation of continuous tightening of new high-end special steel material imports this year will not change significantly in the short term. The competition in the domestic special steel market is gradually turning to the competition of quality and differentiation. Coupled with the fact that the influence of COVID-19 's epidemic situation has not been completely eliminated, there are still many uncertain factors in the market environment. In the first half of 2020, the domestic special steel industry still continues the previous market situation, and the contradiction between insufficient supply of high-end products and overcapacity of low-end products still exists in the domestic market.

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