Steel price or below the 2018 average

In 2018, the profit level of tons of steel increased significantly, and some insiders revealed that they had an average profit of at least 700 yuan/ton. Even after the steel price experienced a sharp decline in November 2018, the gross profit margin of plate and hot rolled coil remained above 8%, rebar remained above 15%, and cold rolled sheet was low. High profits benefited from supply-side structural reforms to reduce production capacity, clear “strip steel”, and increased industry concentration, but the downstream industry's profits were slightly inferior. In 2019, steel prices continued to rise in limited space.

There is a strong positive correlation between industry profits and steel price fluctuations. From 2012 to 2015, the profit of the steel industry declined, steel prices continued to decline, and by the end of 2015, the loss of steel per ton was 200 yuan, and the steel price dropped to the bottom. After 2016, profits continued to rise, steel prices followed, and profits fell in September 2018. Steel prices fell sharply in November 2018, indicating that steel prices were affected by industry profits.
In 2019, industry profits are expected to decline, and steel prices may be lower than the 2018 average.

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