Latest Trends In The Steel Industry In 2019

Latest Trends In The Steel Industry In 2019

In the first half of 2019, the steel industry has the following characteristics: From the perspective of supply, under the influence of the expected decline in profits, steel mills have a high production enthusiasm, steel supply continues to hit new highs; demand, real estate performance is better than expected, infrastructure growth Obviously, the demand for building materials is relatively stable. The automobile, home appliance and ship's prosperity decreased, and the demand for sheet materials continued to weaken. In terms of inventory, there was no difference in the performance of steel inventories, and the inventory of iron ore ports dropped sharply. In terms of profit, iron ore surged sharply and steel production profits fell sharply.

Since 2019, China's fiscal policy has become more active, monetary policy has been relatively loose, and economic operations have maintained a steady and positive trend, creating a favorable market environment for the development of the steel industry.

In 2019, the steel industry was generally stable, with a breakdown:

1. Steel production maintained growth, and overall production and demand linkages were better. From January to May 2019, China's crude steel output was 404.88 million tons, a year-on-year increase of 10.2%.

2. Steel exports increased slightly and imports declined. From January to May 2019, China's steel exports were 29.09 million tons, a year-on-year increase of 2.5%. Although China's steel exports fell significantly in May, but not too worried, the international competitiveness of China's steel is still very strong.

3. The market is generally stable and steel prices fluctuate slightly. Since 2019, there has been a gap in the long plate market, and the long product market is better, but the plate market pressure is still very large.

4. The cost has risen sharply, and the company's efficiency has dropped significantly. From January to May 2019, the steel company of China Steel Association realized a total profit of 85.5 billion yuan, down 18.15% year-on-year. In the same period, steel companies purchased imported iron ore (895, 0.50, 0.06%), which increased by 19.1% year-on-year. Coal, coke (2204, 13.50, 0.62%) and scrap prices also rose, directly affecting corporate profits. In terms of capital status, steel companies have always attached importance to fund management, and the asset-liability ratio has dropped to 63.96%.

Looking forward to the operation of the steel industry in the later period:

1. The global economic growth rate has slowed down and the market demand has been relatively weak. It is expected that China's steel exports will not grow much this year and it is expected to maintain the level of last year.

2. China's macro policy is positive, but downward pressure is still there. Infrastructure and real estate investment need to prevent risks, and the growth of automobile and shipbuilding is weak. Due to the impact of environmental protection and profit decline, the growth rate of steel production will gradually decline in the later period, and the growth rate of downstream steel demand may gradually weaken and stabilize. It is expected that steel prices will continue in the second half of the year. It is a small fluctuation.

3, raw material prices are at a high level, the task of reducing costs and increasing efficiency is arduous, it is expected that the profit level of the steel industry this year is difficult to exceed last year. Since the beginning of this year, the price of imported iron ore has risen sharply, with a rise of more than 50%. There is a sharp increase in steel output, the impact of the Brazilian mine disaster and the Australian hurricane. However, it does not rule out the over-interpretation of the market and the factors of capital entering the speculation. It is unreasonable and unacceptable. Persistent.

The China Iron and Steel Association has already reflected the problems in the industry and the market to relevant state ministries and commissions and regulatory agencies. It is hoped that the investigation and supervision will be further strengthened, market behavior will be regulated, the normal competition order in the iron ore market will be maintained, and iron ore prices will be reasonably compliant.

There is no fundamental change in the supply and demand of iron ore in China. The price of imported iron ore is not sustainable, because the output of foreign mines has gradually recovered, the output of domestic mines is increasing, and the growth rate of steel production will gradually decline. Iron ore may be in a situation of oversupply.

Hong Wei, Managing Director and Research Director of ▍Banking International:

Prices for all asset classes are rising this year, including iron ore, crude oil, gold, emerging markets, and bonds. Although the economic situation this year is still very complicated, it has been reversed compared to last year. Therefore, from the perspective of the cycle, the operation of the