In 019, under the effect of rising iron ore prices and slowing steel demand growth, profit decline became a common problem faced by domestic and foreign steel companies. According to the data released by the China Iron and Steel Industry Association, in 2019, the total profit of steel industry members' steel companies was 188.994 billion yuan, a year-on-year decrease of 30.90%; the sales profit margin was 4.43%, a year-on-year decrease of 2.63 percentage points. At the same time, the Japanese and South Korean steel giants' 2019 performances are also "on the brakes."

Posco's profit drops 32.1% year-on-year

Although it has been rated as the world's most competitive steel company by World Steel Dynamics Corporation (WSD) for 10 consecutive years, in 2019, Posco has also faced huge challenges in terms of profitability.

Data show that in 2019, Posco's sales were 30.37 trillion won (approximately US $ 24.998 billion), a slight decrease of 0.9% year-on-year; operating profit was 2.59 trillion won (approximately US $ 2.132 billion), a significant year-on-year decline of 32.1 %; Operating profit margin was 8.5%, a year-on-year decrease of 3.9 percentage points; debt ratio was 22.1%, a year-on-year increase of 2.5 percentage points.

The main reasons for the significant decline in POSCO's operating performance were rising production costs and falling prices of finished steel. On the one hand, although the price of iron ore in the international market has gradually stabilized after August 2019, it still maintained a high level of operation until the fourth quarter of 2019.The high-priced iron ore purchased by Posco before the fourth quarter is calculated. Into steel production costs, resulting in a substantial increase in costs; On the other hand, Posco has encountered difficulties in price negotiations with major downstream steel users, and its profit margins have been further compressed.

It is reported that by 2020, Posco's sales target is 30 trillion won (about 24.693 billion U.S. dollars), crude steel output and finished steel sales targets are 36.7 million tons and 35 million tons, respectively, and the investment target is 4.1 trillion The Korean won (approximately US $ 3.369 billion) and the loan amount target is 7.2 trillion won (approximately US $ 5.917 billion).

Hyundai Steel's operating profit fell by more than 70%

Data show that in 2019, Hyundai Iron & Steel's sales were 18.07 trillion won (approximately 14.851 billion U.S. dollars), a year-on-year decrease of 2.9%; operating profit was 278.4 billion won (approximately 229 million dollars), compared with 933.5 billion won in 2018. (Approximately $ 767 million) compared with a significant 70.2% decrease; operating profit margin fell from 5.0% in 2018 to 1.5%, a year-on-year decrease of 3.5 percentage points; net profit from 373.5 billion won (approximately $ 307 million) in 2018 It fell to 32.5 billion won (approximately US $ 27 million), a year-on-year decrease of 91.3%.

It is reported that since the second half of 2019, demand in the domestic construction industry has continued to be sluggish, sales of long products have fallen sharply, and prices have continued to fall, which has directly led to the decline in sales, operating profit and net profit of Hyundai Steel. In addition, the operating performance of subsidiaries such as Hyundai Steel's steel processing service center in China declined, and profitability further declined.

In 2020, Hyundai Steel plans to sell 21.38 million tons of finished steel products (including 12.06 million tons of blast furnace-based output and 9.32 million tons of electric furnace-based output), and 21.32 million tons (of which blast furnace-based output is 2019). 11.77 million tons, based on the output of electric furnaces is 9.55 million tons), an increase of about 60,000 tons.

Japan Steel loses 440 billion yen

On February 7, Nippon Steel announced its financial performance forecast for fiscal year 2019 (April 2019 to March 2020), saying that its losses attributable to owners of the parent company will reach 440 billion yen (approximately ($ 3.988 billion).

Forecast data show that in fiscal 2019, Japan Steel lost a total of 317.1 billion yen (about 2.874 billion U.S. dollars) in production and operation. In addition, in fiscal 2019, Japan Iron & Steel also suffered disaster losses such as power outages, fires, and typhoons of 78.7 billion yen (about 713 million U.S. dollars).

High-end and intelligent

Become the main point of attack for steel companies

In the face of profit pressure, building an efficient production structure, researching and developing high value-added products, and accelerating the construction of intelligent factories have become the main directions for the current Japanese and Korean steel companies to improve their profitability.

According to the plan issued by Posco, in 2020, it will continue to expand the sales of high-value-added products World Top Premium (WTP), while improving profitability, leading the future market development trend and enhancing market competitiveness. At the same time, Posco will continue to use artificial intelligence technology to continuously improve production efficiency, product quality and cost competitiveness.

Similarly, Hyundai Steel will continue to develop many high-performance and high-value-added steel products, including steel for polar environments and transportation vehicles in special regions, high-hardness wear-resistant armored plates, and second-generation automotive plates. Enterprise profitability; speed up the construction of "smart enterprises", and strive to achieve the intelligence of the entire business field by developing data platforms covering the entire process, improving data analysis capabilities, and vigorously cultivating talents in the field of artificial intelligence.

Nippon Steel has not stopped the pace of intellectual transformation. In 2020, Japan Iron and Steel will continue to rely on Japan's "industrial value chain" plan and Japan's technological advantages in the field of Internet of Things and industrial robots, and continuously improve the level of intelligence in the entire process, while promoting the industrial Internet wave with companies in different industries "Loosely coupled" links to achieve more precise customized production.