When it comes to steel, China is king, producing more than 1 billion tons a year, which is well over half the world’s output. However, a domestic construction slump means there’s too much steel and too little demand. For the rest of the world, the fear is that it will become more of a dumping ground for excess product, cutting prices, driving plants out of business and putting workers out of jobs. The extent of the challenge was laid out starkly this week in Bloomberg, quoting Hu Wangming, the boss of China Baowu Steel Group Corp., who oversees an empire of blast furnaces — the towering smoke stacks that have underpinned global industrialization for two centuries — churning out 130 million tons of steel every year. That’s more than the US, Germany and France combined. The Shanxi Jianbang Group also highlighted the crisis in recent days. The steel industry needs to cut more than 30% of enterprises to get out of the current difficulty, said General Manager Zhang Rui on Aug. 15, according to a statement on its WeChat channel. Hot rolled coil — a benchmark product — is shipping from China at its cheapest since 2020. Global prices, which typically lag China by 2-3 months, are also at multiyear lows.
Stock focus: Pick n Pay
Stats SA figures show that food retail sales are up +9% year-on-year from March to June 2024, which is positive for retailers, including Pick n Pay (PIK-JSE). The country also hasn’t had load-shedding for ~85% of the period, which should prove beneficial to sales momentum and profitability due to the reduction in diesel spend. The retailer’s restructuring is also gathering momentum, with the financial impact of store closures on operating profit likely to come through in the latest results. The market will also look for any updates to timing or quantum of the Boxer IPO.
Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions. Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading.
We use cookies on our website to improve our services, keep our website secure, and serve you more relevant content. To find out more see our Cookies Policy
This week’s sector and stock focus
Sector focus: Steel
When it comes to steel, China is king, producing more than 1 billion tons a year, which is well over half the world’s output. However, a domestic construction slump means there’s too much steel and too little demand. For the rest of the world, the fear is that it will become more of a dumping ground for excess product, cutting prices, driving plants out of business and putting workers out of jobs. The extent of the challenge was laid out starkly this week in Bloomberg, quoting Hu Wangming, the boss of China Baowu Steel Group Corp., who oversees an empire of blast furnaces — the towering smoke stacks that have underpinned global industrialization for two centuries — churning out 130 million tons of steel every year. That’s more than the US, Germany and France combined. The Shanxi Jianbang Group also highlighted the crisis in recent days. The steel industry needs to cut more than 30% of enterprises to get out of the current difficulty, said General Manager Zhang Rui on Aug. 15, according to a statement on its WeChat channel. Hot rolled coil — a benchmark product — is shipping from China at its cheapest since 2020. Global prices, which typically lag China by 2-3 months, are also at multiyear lows.
Stock focus: Pick n Pay
Stats SA figures show that food retail sales are up +9% year-on-year from March to June 2024, which is positive for retailers, including Pick n Pay (PIK-JSE). The country also hasn’t had load-shedding for ~85% of the period, which should prove beneficial to sales momentum and profitability due to the reduction in diesel spend. The retailer’s restructuring is also gathering momentum, with the financial impact of store closures on operating profit likely to come through in the latest results. The market will also look for any updates to timing or quantum of the Boxer IPO.
Information correct at time of publishing. It is important to conduct thorough research and analysis using a combination of fundamental and technical analysis techniques to make informed trading decisions. Additionally, consider your risk tolerance, investment objectives, and time horizon when assessing company performance for trading.