Stainless Steel Pipes Are Affected By The Double Effects Of Falling Prices And Rising Prices Of Major Raw Materials

In 2019, due to the double impact of the downward price of stainless steel pipes and the rise in the prices of major raw materials, the steel industry will not increase profits. In early 2020, affected by the COVID19 epidemic, the prices of major stainless steel products continued to fall.

The prices of the main raw materials, iron ore, were relatively strong and still fluctuated at a high level. The decline was not large, resulting in a further decline in the profit of the stainless steel pipe industry.

According to the statistics of the China Steel Association, in 2019, the sales profit rate of key steel companies of the China Steel Association was 4.43%. From January to February 2020, due to the further decline in stainless steel pipe prices, the sales profit rate fell to 2.35%; The profit margin is only 7.4%. The profit margins of international steel companies are not high, and POSCO’s 2019 operating profit margin is 8.5%.

In China, there is also a tendency for profit distribution to be inclined to upstream raw material supply and downstream monopoly consumer products, but only a few companies can achieve such a high profit rate as international iron ore companies.

Among the production costs of stainless steel pipe enterprises, the cost of raw fuel generally accounts for about 70%, and iron ore as the main raw material costs account for the highest proportion. The most important cost reduction is to reduce the procurement cost of raw materials, especially iron ore.

The current output of stainless steel pipes (duplex 2205 pipe, duplex pipe) has dropped, and the steel price is significantly lower than the same period last year, but the price of iron ore is stronger, which deviates from the trend of stainless steel pipe prices, which does not reflect the true supply and demand relationship, including pricing The reason for the mechanism is more important because of the unequal bargaining power between upstream and downstream.

At present, the concentration of the stainless steel pipe industry in developed countries is already high, but iron ore is a global market, and it is necessary to compare the concentration of the global stainless steel pipe industry.

In 2018, the world’s top ten largest stainless steel companies accounted for about 24% of crude steel production, while the total iron ore output of the four major mining companies accounted for about half of global production.