The steel industry has undergone a structural adjustment

China has cut steel production capacity of China hollow section tube by more than 150 million tons since 2016, 114% of the global total, according to 21st century business herald.To this end, China has relocated 280,000 steel workers alone, more than the total number of steel jobs in the US, Europe and Japan. At present, China's steel market conditions have improved significantly;capacity utilization rate of  crude steel has returned to more than 80% of the reasonable range. The capacity has entered the deep water now; the steel industry transformation and upgrading difficulties are also increasing. Since last year, due to the favorable market situation of the steel industry, driven by high profits, some regions and enterprises have become more willing to invest in the steel industry, and the implementation of capacity replacement in some regions is out of shape, and the impulse to increase production has increased significantly.

After more than three years of cutting capacity of mild steel tube, the steel industry is now entering a stage of structural adjustment. The means of administrative regulation is gradually weakening, mainly through the market demand by limit production enterprises, but this year the continuous pessimistic will lead to the iron and steel industry of real estate profits further narrowed. Under the pressure of deleveraging of domestic real estate enterprises, operating income and net profit of a number of listed steel enterprises in the third quarter fell to different degrees and they will continue to bear some pressure in the short term. On Oct. 28, chongqing iron and steel released its third quarter 2019 report, showing that its operating revenue in the first three quarters was 17.284 billion yuan, down 0.87 percent from the same period last year. Net profit attributable to shareholders of listed companies was 720 million yuan, down 51.36% from the same period last year.

Chongqing steel pipe suppliers explained that the decline was mainly due to a 4.4 percent year-on-year drop in the composite sales price of steel, reducing profits by 759 million yuan. The price of ores, coal, alloys, scrap and other raw fuels increased, reducing profits by 824 million yuan; Steel sales volume increased by 4.41% year on year, increasing profit by 100 million yuan; The reduction of process costs and the reduction of expenses added 724 million yuan. In addition, steel giant baosteel's previously disclosed third quarter report showed that baosteel's operating revenue in the first three quarters of this year totaled 216.876 billion yuan, down 3.75% year on year. Net profit was 8.874 billion yuan, down 43.65% year on year; Net cash flow of structural steel pipe from operating activities was 19.595 billion yuan, down 46.68% year on year.