“From January to August this year, under the background of China’s stable economy, China’s steel industry has shown a good operating trend, but external uncertainties have brought some downward pressure on the development of the industry.” China Iron and Steel Industry Qu Xiu, vice president of the association, said at the Asian Steel Forum in 2019 in Shanghai that the Chinese steel market is currently in a weak balance.
Driven by domestic demand, China’s steel output maintained a relatively high growth rate in the first eight months, and steel, iron and steel production increased by 9.1%, 6.9% and 11% respectively. During the same period, China’s steel prices fell by 5.3% year-on-year. “The supply and demand side of China’s steel market is still in a weak balance. In the case of high production, the market’s expectation of contradiction between supply and demand is strengthened.” Qu Xiuli said that from the monitoring of member companies of the Iron and Steel Association, the profit of the first seven months It is on a downward trend.
From the perspective of import and export, China’s steel exports have declined for the fourth consecutive year. In the first eight months of this year, China’s steel exports were 449.74 million tons, down 4.4% year-on-year, and steel imports fell 12.8% year-on-year. Qu Xiuli believes that the decline in steel exports this year is related to the international economic downturn and the increase in China’s domestic demand. 2019 is the fourth year of China’s supply-side reform. In 2016-2018, the domestic steel market is in a state of relatively tight supply and demand, and the price operation is mainly driven by changes in the supply side of steel. With the deepening of the supply-side reform, the industry chain profits will be redistributed in 2019, steel prices will fluctuate in a narrow range, and corporate profits will return.
Relevant industry researchers said that from 2019 to 2020, China’s steel industry will usher in the peak period of layout optimization and restructuring, high-quality capacity supply will expand, supply-side reform will force low-efficiency capacity to clear, and steel companies’ debt ratio will gradually decline. China’s steel industry will move toward a high-quality green development stage.
Qu Xiuli said that the current development of China’s steel industry mainly faces three difficulties and problems: First, environmental protection requirements are becoming more and more strict, and corporate cost pressure is high; second, international trade protection is increasing, global economic growth is slowing, and external demand is insufficient; Third, the price of raw materials rose, and the profit margin of enterprises narrowed.
Looking ahead to the steel market in the future, China’s infrastructure investment will gradually improve in the second half of this year, providing support for steel demand. The supply and demand of steel will shift from tight balance to relatively loose supply, while export demand will remain flat, and the whole society’s inventory will enter the stage of accumulation. At the same time, the cost of steel has moved down a step, and in the future or under the current stage of shock operation, the profit of steel production enterprises will return in the second half of the year, regional differences are obvious.
“Steel is one of the pillar industries of the national economy. There are still many opportunities. It is hoped that all parties concerned will strengthen exchanges and cooperation and jointly promote the sustainable and healthy development of the industry.” Qu Xiuli said that in the next step, the steel industry should deepen the supply-side structural reform. Promote industrial restructuring; improve quality and service to meet higher requirements in the downstream market; adhere to the concept of low-carbon green development, achieve integration and coexist; optimize resource allocation and enhance sustainable operational capabilities.
Post time: Oct-11-2019