The new coronary pneumonia epidemic has brought unprecedented impact on China's economic and social development, and has had a greater impact on steel demand. On April 22, the China Iron and Steel Industry Association held an information conference for the first quarter of 2020. He Wenbo, party committee secretary, executive chairman and leader of the epidemic response leadership group of the China Iron and Steel Industry Association, said that from the first quarter of China ’s major steel use The decline in industry indicators is more obvious, but the decline in steel demand is only periodic. With the steady implementation of the country's economic stability and people's livelihood policies, it will provide a better external environment for the development of the industry. It is expected that the demand for steel will increase significantly.
In the second half of the year, with steady growth and the implementation of policies to protect people's livelihood, overall steel demand will be better than in the first half. "The changes in steel demand depend on changes in the international epidemic situation." He Wenbo believes.
National standard steel companies have basically resumed work
During the New Coronary Pneumonia epidemic, China's steel industry gave full play to the role of national economic ballast stone and provided important raw material support for the national economic recovery. Chi Jingdong, vice chairman of the China Iron and Steel Association, member of the leadership team for outbreak response, and leader of the Steady Investment Working Group, said that from the perspective of the steel companies monitored, the national standard steel companies have basically resumed work. From the monitoring of the main production equipment, as of April 19, 136 member companies of China Iron and Steel Association were producing 87.4% of which, the production of blast furnace was not resumed mainly due to the epidemic situation. The production was suspended and not resumed due to the epidemic situation. "Environmental protection and production limitation measures have played a positive role in the steel industry's response to the impact of the epidemic." Chi Jingdong believes.
Luo Tiejun, vice chairman of the China Iron and Steel Industry Association, member of the leadership team for outbreak response, and leader of the market stabilization working group, said that in March, except for the increase in pig iron, the output of pig iron, crude steel, steel, and coke in our country decreased slightly year-on-year, mainly The reason is that due to the epidemic situation, the closed management of the community, the inability of the social scrap to receive goods and the obstruction of transportation, leading to a serious shortage of domestic scrap resources, long-term steel companies are forced to reduce the use of scrap.
He Wenbo said that the overall judgment of steel demand in 2020 is declining, with the largest decline in the first quarter. As the downstream industry resumes production in the second quarter, demand will increase significantly from the previous month, but it may still decline year-on-year. However, China has proposed to actively expand effective investment, implement old community transformation, and strengthen traditional infrastructure and new infrastructure investment, which will provide strong support for steel demand. It is expected that the construction industry's proportion of downstream steel will increase to about 58%.
He Wenbo said that China's steel consumption mainly has three flows: one is to the construction industry, which accounts for about 55% of the steel used in the downstream industry; the other is to the manufacturing industry, accounting for about 45%; But the proportion is very small, and most of it is used for domestic consumption. Affected by the overseas epidemic situation, the demand for foreign steel products has fallen sharply, and the number of new orders received by China's major export companies has decreased significantly in March and April. Since the end of March, it has been common for overseas orders to postpone delivery. At the same time, there are also some cases where orders are required to be reduced or even cancelled, which has an adverse effect on China's steel exports.
Strengthen policies to hedge the impact of the epidemic
He Wenbo pointed out that the downstream demand weakened due to the epidemic situation is a challenge that the global steel industry needs to jointly address, and this is also true for China. First, the main destinations of China's steel exports are ASEAN, South Korea and other countries and regions. The EU and the US are not the main markets. In 2019, China's total steel exports accounted for 33.4%, South Korea 12.9%, EU 5.0%, and US 1.3%. However, the main destination of China's exports was affected by the epidemic, which led to a sharp decline in direct steel exports. Second, on the whole, the reduction in output of the foreign steel industry is not as great as the decline in demand. With the improvement of China's epidemic situation and the restoration of production and living order, domestic steel demand has increased, and there has been a rapid increase in imports of billets and hot coils. Third, the reduction in downstream demand for European and American steel has a negative impact on China's indirect export of steel. If the international epidemic situation continues to deteriorate, the decline in demand will be even greater. If the domestic expansion of domestic demand offsets the impact of falling exports, the decline in demand may shrink.
Many countries and regions with severe epidemics in the world are China's export destinations. Export orders may be reduced and orders may be destroyed. The demand for steel in manufacturing is expected to decrease. However, the policy of hedging the impact of the epidemic will increase, actively expand domestic demand, and support enterprises to export to domestic sales, which will help promote the resumption of production in the manufacturing industry. First, the problem of serious overcapacity in China's steel production capacity has been basically resolved. At present, the release of China's steel production capacity is adjusted according to market changes. Due to the epidemic situation, there has been a phased misalignment between production and actual consumption, but it is no longer a problem of serious overcapacity in the original sense. Second, the current steel production capacity is in a state compatible with the consumption needs of China's economic and social development.
He Wenbo said that preventing the recurrence of serious overcapacity contradictions has always been a risk point of high concern in China's steel industry. From the perspective of industry policy, the state strictly stipulates that new steel production capacity is not allowed. New steel production capacity transformation and construction must implement a reduction and replacement policy. From the perspective of actual investment and construction of iron and steel enterprises, iron and steel enterprises pay more attention to investment in process equipment upgrading, technological innovation, quality improvement, market development, ultra-low emissions, and green development. From the perspective of the challenges facing the development of the industry, affected by the epidemic, special attention should be paid to the risks of the dislocation contradiction between the release of periodic production capacity and the actual consumption recovery.
The production and operation of the steel industry is relatively stable
At present, the production and operation of China's iron and steel industry is relatively stable. Although the benefits are not satisfactory, it has the ability to cope with the current risks, and its ability to resist risks has been significantly enhanced. "The ability of the steel industry to withstand major risks is relatively strong, and it also stems from its own characteristics and advantages: First, the industrial chain is relatively complete, second, the marketization degree is relatively high, and third, the technical independence of the steel is relatively strong." He Wenbo think.
Qu Xiuli, vice chairman of the China Iron and Steel Association, member of the leadership team for epidemic response, and leader of the stable operation working group, said that with the effective control of the epidemic, the resumption of production and production accelerated, it is expected that the macroeconomic performance in the second quarter will be significantly better than the first The steel demand situation is expected to improve further, steel prices are expected to stabilize and rebound, and industry benefits will also improve. However, the spread of the overseas epidemic has increased the difficulty of exporting steel products, and has also brought serious challenges to the export of mechanical and electrical products in China, which is not conducive to the balance between supply and demand in the domestic steel market. At the same time, it is necessary to pay attention to the fact that steel inventories remain high. Although the inventories have declined slightly recently, the overall level is still relatively high, which puts greater pressure on the market in the later period.
"Of course, there are still some problems, but these problems will not have a fatal impact on the development of the steel industry. Overall, the production and operation of the steel industry is relatively stable, although the benefits are not satisfactory, I believe that the steel industry has the ability and confidence to deal with the current Risks and maintain industrial safety. "He Wenbo believes. First, the industrial chain is relatively complete, second, the degree of marketization is relatively high, and third, steel technology is relatively autonomous.
"Strengthening support for the industrial chain is very important. As long as the downstream industrial chain can withstand the risks and can gradually pick up in the second half of the year, the steel industry itself has a market. Because the development of China's steel industry depends on the downstream industry, except for the construction industry Outside is manufacturing. "He Wenbo emphasized. China is a major exporter of manufacturing industry, and we hope that the state ’s support for industries such as automobiles, home appliances, machinery, and containers can be implemented, whether it is support for exports or support for expanding domestic demand. Support for foreign trade companies should be in place and hedged The losses caused by the epidemic.
"China's steel industry must always maintain a strategic focus, not only to set a good direction, to prevent the deformation of the implementation of the established policies, but also to step on the brakes, resolutely curb all kinds of violations of laws and regulations, but also to increase the throttle and actively fill the industry shortcomings. Board. "He Wenbo thinks.
