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Steel prices in the first quarter results for the three different primary fuel prices rose

    Also iron and steel enterprises, the same iron ore prices are subject to factors, but the three major domestic iron and steel in the first quarter of this year listed Baosteel, Wuhan Steel shares, Angang Steel Company's performance are quite different.

    The first quarter of this year, the three very different steel profitability of listed companies. Angang Steel Company announced yesterday a quarterly show, the first quarter of this year net profit of 7100 million, swing chain a substantial reduction of 93.82% year on year; Wuhan Steel net profit of 610 million yuan of shares, representing a substantial increase of 111%; Baosteel has not yet announced a quarterly, a bit brokerage analysts yesterday to the "First Financial Daily" said the first quarter of Baosteel net profit fell slightly, a decline may be about 10%.

    Wuhan Steel shares with the procurement of iron ore in the first quarter of this year a similar Nanganggufen increase profits, net profit of 271 million, an increase of 9.21%.

    For a quarter of the decline, Angang Steel Company gives a look "reasonable" explanation. The company said was mainly due to rising prices of raw product costs. But it is worth noting that, iron ore, coking coal and other raw material and fuel prices is not only the problems encountered Angang Steel Company Limited, a fact,iron chain which is the common problems faced by the steel companies.

    Since the domestic iron and steel enterprises are facing the same problem, so why the three companies in the first quarter performance difference is so large, in addition to the three different structures of the company's products, but also largely due to the three companies iron ore procurement.

    Baosteel Wuhan Iron and Steel shares and mainly rely on imports of iron ore, iron ore self-sufficiency while Angang Steel Company is relatively high, but Angang Steel Company's iron ore, nearly half of the Anshan Iron and Steel Group to purchase the domestic iron ore mining companies.

    Point of view from the pricing model, pricing models in the year long agreement by the international break after three major mining companies, according to Qi Lin Deng, chairman of Wuhan Iron and Steel shares previously introduced to the newspaper, Wuhan Steel shares used quarterly pricing, monthly pricing, spot pricing model procurement of iron ore; Baosteel pricing model using only quarter; Anshan Iron and Steel Group purchased shares to the ore, is the use of semi-annual pricing model, not only that, Anshan Iron and Steel Group is also committed to determining the maximum amount of price concessions given to Angang Steel Company, offers the first half of the amount of Annual imports of iron ore to the coast of China Customs average offer of 5%.

    Angang Steel Company Limited in accordance with the procurement of iron ore pricing principle, Angang Steel Company Limited in 2010 a quarter of the purchase price is derived based on the second half of 2009, while the second half of 2009, international iron ore prices are low; the first quarter of 2011 purchase price is derived based on the second half of 2010, but the second half of the international iron ore prices in 2010 at a high point.

    The first quarter of this year relative to last year's fourth quarter iron ore prices to fall, relatively speaking, with the spot price of steel costs are lower, while the semi-annual price of steel costs are higher. This means that if the first quarter of this year, three companies from the financial situation, the annual price, semi-annual pricing model is not necessarily more conducive to the development of iron and steel enterprises.

    In the March 31, 2010 at Baosteel results briefing, for the long association of the name only and index pricing model, that He Wenbo, chairman of Baosteel, Baoshan Iron and Steel are both advantages and disadvantages of short-term pricing mechanism, such as the length of the fourth quarter of 2008 co-price, 10 million tons ore mines are all high-priced, high digest this part of the mine is not easy.

    In He Wenbo view, if ore price rise, steel prices have not increased the risk of large steel mills, but the steel ore price adjustment lags in the adjustment, the turning point is often the first out of steel, mineral prices and then adjusted.

    However, three major steel mills in the first quarter of this year and could not explain the performance of spot pricing, quarterly pricing and other short-term pricing model, we will be conducive to the development of steel mills. Short-term or long-term pricing models pricing models in favor of steel enterprises, need to see what kind of future iron ore price trend. If the next few years, iron ore prices are rising channel, annual, semi-annual and other long-term pricing model it will help steel companies; if iron ore prices in decline, is not conducive to long-term iron and steel enterprise pricing model, then use spot pricing model is more conducive to iron and steel enterprises to reduce procurement costs.

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