In longer term small Chinese steel stocks are golden
By Daniel at 10 May, 2009, 9:45 am
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Falling inventories with traders pushing up steel prices in China
Saturday, 09 May 2009
Mysteel survey shows traders’ steel inventories in the country added up to 9.47 million tonnes last weekend including 4.4757 million tonnes of long steel and 4.9989 million tonnes of flat steel down 200,200 tonnes and 47,600 tonnes respectively from a week earlier.
Steel industry has eyed positive signals recently, with steel price shaking off ten-week-long downswings. Some steel mills have subsequently raised EXW prices for some products. Falling inventories can further buoy up the uptrend of steel price.
Many medium and small steel mills have resumed productions since this year beginning, to great extending offsetting the production cutbacks by big steelmakers. Many mills have to build up inventories after reductions in Q4 of 2008.
Statistics from Mysteel reveal 71.4% of the steel mills report normal inventories in May with 18.2% and 10.4% eye low and high inventories compared with 44%, 42% and 14% respectively in last month.
Most analysts remain cautious towards steel price trend in view of complicated macro-economic situation. WIND statistics show inventories in mills fell from 8.3312 million tonnes in February to 8.2533 million tonnes in March but still much higher than the 6.8411 million tonnes in last March.
Baoshan Iron & Steel Co Ltd, Shanxi Taigang Stainless Steel Co Ltd. and Inner Mongolia BaoTou Steel Union Co Ltd ranked top three in inventories value in virtue of CNY 29.151 billion, CNY 11.997 billion and CNY 11.338 billion respectively. Angang Steel Company Limited, Xining Special Steel Co Ltd and Beijing Shougang Co, Ltd eyed lowest inventories/total assets ratios i.e. 9.9%, 10.1% and 10.2% respectively, while Pangang Group Sichuan Changcheng Special Steel Co Ltd, Nanjing Iron & Steel Co Ltd Guangzhou Iron and Steel Co Ltd. and Inner Mongolia BaoTou Steel Union Co Ltd reported high ratios.
Small steel mills performed better in inventory turnover than big ones. Beijing Shougang Co Ltd., Laiwu Steel Corporation and Nanchang Changli Iron & Steel Co Ltd did best in inventory turnover last year.
33 listed steel mills suffered wide deficits in the first quarter, with total losses of CNY 4.59 billion. Net profits collapsed 130%YoY from the same period of last year. 22 mills have published interim performance forecasts, predicting losses or lower growths. Angang Steel Company Limited, Hunan Valin Steel Co Ltd and Sansteel Minguang Co Ltd have all expected profits to slump more than 100%.
(Source: Securities Times)
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