In the first half of this year, China's steel production continued to grow. According to statistics, from January to April, the national pig iron output was 277.99 million tons, a year-on-year increase of 1.3%; the crude steel output was 319.46 million tons, an increase of 1.3%; the latest statistics from the China Iron and Steel Association show that in late May 2020, the crude steel day of key steel enterprises was The average output is 2.0925 million tons, which is close to the historical peak in mid-September 2019 (2.105 million tons), an increase of 12,100 tons or 0.58% month-on-month. It is expected that the steady growth of pig iron and crude steel output in the country will not change in the first half of the year, and the year-on-year growth rate will be around 2%.
Looking forward to the situation of China's steel production in the second half of the year, it is expected that its growth level will increase. Among them, the annual crude steel output will exceed 1 billion tons for the first time, an increase of more than 3% over the previous year.
The acceleration of China's steel production in the second half of the year was mainly driven by the following three forces:
The first is strong domestic demand. Since the beginning of this year, despite the impact of the "epidemic", domestic steel demand across the country has continued to grow steadily. According to statistics, the apparent consumption of crude steel in China from January to April 2020 was 302.18 million tons, a year-on-year increase of 2.5%. It is estimated that in the first half of the year, the apparent consumption of crude steel in the country will not be less than 450 million tons, and the year-on-year growth rate should also be around 3%. After entering the second half of the year, due to the effects of counter-cyclical adjustment policies, the full recovery of construction and industrial production, and the entry of traditional consumption peak seasons, domestic steel demand will continue to increase, driving the growth rate of crude steel apparent consumption to 3 in the second half of the year. %above. In this way, the apparent consumption of crude steel in the whole year will approach the level of 1 billion tons.
The second is that export demand will improve. Due to the severe impact of the epidemic, the national steel export volume fell by 14% year-on-year from January to May this year, of which the decline in the first two months reached 27%. This situation is expected to improve in the second half of the year. The main reason is that some countries have been forced to "unblock" and resume work and production despite the threat of the epidemic. Although this move is very risky, it can objectively stimulate the economic recovery temporarily and improve the demand environment for China's steel exports in the second half of the year. Direct export and indirect export. It is expected that the decline in national steel exports will continue to narrow in the second half of the year, and may even turn to rise.
In the end, more new production capacity was replaced. Generally speaking, capacity is the basis of output. In recent years, the country has added a lot of advanced production capacity in the name of production capacity replacement, and many of them will be put into production in the second half of this year, which makes the steel production engine more powerful in the second half of the year. At the same time, in the first half of this year, the national steel sales price continued to rise, and the profit per ton of steel was not low, which will also stimulate steel enterprises to actively produce, improve capacity utilization, and achieve greater steel output in the second half of the year.
It can be seen that stronger consumer demand, a larger capacity base and profitable product sales prices have jointly promoted the acceleration of China's steel production in the second half of the year.
The accelerated growth of China's steel production in the second half of the year will have multiple impacts on the market conditions of black series commodities: first, it will generate strong demand for imported iron ore; second, it will create pressure on the supply of steel in the steel market; third, it will weaken the profitability of steel products per unit. In this regard, relevant market participants should pay close attention. (Note: The article comes from Lange Steel Network)