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Steel 2008 Keywords: cost-effective high prices

    First half of 2008 included medium and large steel Steel Association statistics, corporate profits rose 26%. From the current situation, the steel industry in 2008 net profit is expected to increase 30% -40%. "High-cost, high price, high efficiency" booster cables is the 2008 running of the characteristics of the steel industry.

    Medium to long term, insufficient supply of iron and steel will be a bull market,battery clip the industry boom for at least 3 to 5 years.

    From the demand perspective, demand remains strong. Subprime mortgage crisis can not be overstated. Despite its leading U.S. and global economic slowdown, but a necessity for industrial steel products,tow rope the demand is relatively rigid, although U.S. economic growth this year, only 0.9%, but there are still U.S. steel consumption growth of 6.5%.ratchet tie dowm Fast-growing emerging market countries, steel consumption, steel products coupled with the developed countries demand constantly updated to ensure that the strong global steel demand. International Iron and Steel Association in April 2008 of the latest demand forecast in the future remains optimistic about the expected steel consumption in 2008 growth forecast to 6.7%, higher than the growth rate of 6.6% in 2007; is expected to grow 6.3% in 2009 still maintained a strong demand. The period of heavy chemical industry in China, before the completion of the industrial demand for steel will continue to maintain rapid growth.

    From the supply point of view, low supply growth. First half of 2008 growth of 9.6% of crude steel, 2006, 2007, 18.3% and 18.9% over the same period the growth rate compared to greatly reduced. 2000 to 2004 the steel industry's fixed assets investment in the dynamic formation of new capacity has basically released. Since 2004, the national steel industry, strict control of fixed asset investment, coupled with the elimination of backward production capacity in recent years to make real progress in controlling the excessive growth of steel supply played an important role. According to local government and the Development and Reform Commission signed letters of responsibility for the elimination of backward production capacity requirements, 2008 to shut down and eliminate backward iron smelting capacity of 37.06 million tons, steel-making capacity of 38.2 million tons. Compared to 470 million tons of pig iron in 2007, the total production of 490 million tons of crude steel, the elimination of backward production capacity accounted for 8% of the ratio.

    Low iron and steel era is over. From the demand and supply side, the next 3 to 5 years the steel industry will remain the economy.

    Recently, Shandong Iron and Steel Group, Hebei Iron and Steel Group and Guangdong Iron and Steel Group have been established, that the pace of domestic iron and steel mergers and acquisitions is accelerating. The future upgrading of industry concentration will increase the upstream and downstream industry bargaining power of enterprises to further enhance the industry level of profitability.

    8 listed steel companies will be announced before the end of mid-year report. We expect to have 10 first half net profit of listed steel companies may grow more than 50% of listed companies accounted for about steel 1 / 3.

    Domestic steel companies have international counterparts despite the unparalleled growth, but even lower than the international peer valuations. Domestic steel stocks at a low price-earnings ratio, low book value state, some companies have close to 1 times book value, if taking into account the revaluation of iron and steel enterprises, the real is only 0.6 to 0.7 times book value. And even taking into account macro factors, the next 2 to 3 years is expected to remain listed steel companies still 20 to 30% profit growth. Therefore, the steel stocks has great investment value.

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