Anshan Iron & Steel: We are studying the way to change the pricing of iron ore supply

Zhang Xiaogang, general manager of Anshan Iron and Steel Group and the general manager of Anshan Iron and Steel Group, told the First Financial reporter on March 13 that Angang’s 2011 loss was mainly related to the company's iron ore procurement pricing model. The board of directors is currently studying the pricing of raw material supply for the group and the listed company. .

Earlier, Angang Steel Co., Ltd. announced that it is expected that 2011 net profit attributable to shareholders of listed companies will have a loss of about 2.151 billion yuan and a basic loss per share of about 0.297 yuan per share. In 2010, Angang Steel achieved a net profit of 1.704 billion yuan.

For the cause of the huge loss, Angang said that the main reason is that the increase in raw fuel prices is higher than the increase in steel prices and blast furnace overhaul and other factors, especially in the fourth quarter, steel prices dropped sharply, and the main raw fuel prices are still running at a high level, making the company The fourth quarter fell into a loss situation, resulting in losses for the entire year.

Insiders pointed out that the reason why Anshan Iron and Steel Co., Ltd. lost so much in the fourth quarter was mainly due to its iron ore pricing model. Anshan Iron and Steel Co., Ltd. purchases iron ore mainly through group procurement. The price does not follow the market. Instead, it sign a contract for half a year. The principle of contract pricing is based on the average customs import price announced by the Chinese Customs Service for the first half of the year. 5% discount.

In this regard, Zhang Xiaogang admitted frankly that under this pricing model, during the period of rising iron ore, Anshan Iron and Steel Co., Ltd. could lock in certain costs. However, when the corresponding iron ore fell, the procurement costs of Angang Steel could not be quickly reflected. According to calculations by BOC International, the average iron ore procurement cost of Anshan Iron and Steel Co., Ltd. in the second half of 2011 may be “contrary” with a 50% increase.

At present, most domestic iron and steel companies have gradually taken stock of the cost of iron ore procurement. For large steel companies such as Baosteel, the price of imported ore is gradually shifting from the average price of the previous quarter to the current quarter.

As for the future iron ore pricing model adopted by Anshan Iron and Steel Co., Zhang Xiaogang said that the current board of directors is still studying and the time period for changing the contract is one of the options.