Himfr Reports Steel Price Increases Pessimistic in the Second Half Year

Aug 31, 2010, 10:00 ET from Himfr.com

BEIJING, Aug. 31 /PRNewswire-Asia/ -- Himfr.com, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, reports that steel price increases in China are pessimistic in the second half of the year.

Himfr reports that since the first half year, macro economic and steel demand continues to recover, domestic steel production enthusiasm is high, and steel production constantly reaches records, but on the other hand, steel prices are pulled by demand, high cost support and market expectation and these factors make the price rise soar.

Himfr analyzes that the steel industry's gross profit accounted for a total cost ratio from first quarter 5.32% drop to 5.29%, steel industry's gross profit accounted for operation revenue proportion gradually declining, which shows that in the process of performance improving, cost growth rate was less than income growth.

Inventory turnover and accounts receivable turnover have obviously improved over last quarter, as inventory turnover from first quarter saw a 5.5% drop to the second quarter 5.6%. Accounts receivable turnover is from 2008, 49.2 to 50. Turnover condition improvements are mainly due to the rising incomes. Inventory turnover efficiency improvement displays the first half year of 2010 saw steel enterprise stock-levels under no pressure.

Due to the second half year, the cost pressure will increase, with steel enterprises transfer price to downstream ability decreased, Himfr estimates that the future margin will still see a declining trend.

In the first half of 2010, under the global economy improvements, China's macroeconomic and steel demand was in recovery, and steel factories' production activity increased, the domestic steel market saw high quantities and prices increased momentum. Himfr predicts that in the second half year as domestic demand drops and export volume declines, the short-term steel price has downward pressure, at the same time ore and other similar raw material prices will remain high. With the steel enterprises' downstream price transfer ability decreasing, Himfr thinks that the steel industry profits will be affected in the second half year.

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