Chongqing Iron and Steel Co., Ltd. (601005.SH, hereinafter referred to as “Chongqing Iron and Steel”) has just released an announcement that, after preliminary calculations by the financial department, the company expects that the net profit attributable to the shareholders of the listed company in 2011 will suffer large losses. However, no specific amount of loss was announced.

Chongqing Iron and Steel said that the main reason for its loss was the significant downturn in the steel market, the increase in the price of raw materials such as iron ore, and an increase in the cost of steel products. At the same time, there are also factors that increase the company's operating costs and financial costs.

According to the Ministry of Commerce, the price of production materials monitored by the Ministry of Commerce from December 19 to 25 fell for five consecutive weeks. Among them, the price of steel fell by 0.4%, and the decline in construction steel prices was among the highest. Among them, Φ12mm rebar and Φ6.5mm high-speed wire all fell by 0.6%. The construction of winter projects decreased, and the demand for steel products fell. The price dropped slightly for five consecutive weeks and fell compared to the middle of November. 1.6%.

Hua Xiaotai analyst Yin Xiaoming said that in the second half of 2011, as the price of steel fell, the profitability of steel companies continued to decline. The relative overcapacity in the iron and steel industry and the slowing down of downstream demand will be hampered by the upstream iron ore cost constraints. The industry's low-efficiency operation will be the norm. In the future, with the downstream demand and the rebound of steel prices, the overall efficiency of the industry may improve.