Since July, the temperature has been rising, and people generally feel that the summer is unbearable. However, the steel industry has no heat in this summer, as cold as entering the Arctic ice and snow, and the level of industry profits has been at a new low since 2015.
According to the data of the National Bureau of Statistics, from January to May 2023, the operating income of ferrous metal smelting and rolling processing industry was 3,366.71 billion yuan, down 8.8% year on year; Operating costs were 3,252.12 billion yuan, down 6.5% year-on-year; The loss was 2.1 billion yuan, down 102.8% year-on-year.
Hainan steel wholesale
' Three feet of ice, not cold in a day ' , data from the industry and government statistics departments show that since the first quarter of this year, domestic steel prices have continued to fall, sluggish demand, overcapacity is more obvious. The industry generally believes that the weak demand side coupled with excess capacity on the supply side is the fundamental reason for the continued low steel market prices.
01
Big change:The steel industry reshuffle
Since 2023, the steel industry has shown a clear peak season is not ' prosperous ' , and the phenomenon of enterprise losses has expanded. This should be ' hot ' ' golden March ' turned into a ' watershed ' of steel prices, since the middle of March to May 31, rebar main futures prices have fallen 20.81%. The book assets of steel inventory have shrunk rapidly, and the profits of enterprises have been significantly damaged.
Chen Panfeng, general manager of Central Plains branch of Shanxi Jianbang Group, summarized the current steel market as ' off-season is not light, go expected; Peak season is not prosperous, go realistic. ' He said that today's January to March off-season is expected, after March 15 to the end of May, is supposed to be the peak season, but walk is the reality, now June to July is off-season and began to walk expectations, the market is now affected by domestic policies, news and the impact of foreign capital markets is more strong. Expected to rise, expected to fall, now the financial pricing attributes of steel prices continue to strengthen, futures lead the spot in the up and down.
' Now the steel industry is still in a difficult situation, manifested in six difficult words:difficult to recover the economy, difficult to boost the real estate, difficult to fall production, difficult to fall iron ore, difficult to rise the profits of steel enterprises and difficult to do steel trade business. ' In the interview, Chen Panfeng told China Steel network, now the steel industry is experiencing ' the eve of change ' , a great change is quietly coming, the industry to merger and reorganization, industrial restructuring, business model change, China's steel industry development has entered a deep adjustment period.
At the ' All-United Metallurgical Chamber of Commerce 2023 President (expanded) office meeting ' held recently, Zhao Xizi, honorary president of the All-United Metallurgical Chamber of Commerce, said that the steel industry has three turning points in the past 20 years, and 2020 to this year is the third time, demand is shrinking, but there is no large-scale bankruptcy phenomenon, reflecting the strengthening of the toughness of various enterprises in the steel industry. That's a very rare quality.
Ding Liguo, president of the All-United Metallurgical Chamber of Commerce and chairman of Delong Group, believes that in the next few years, even 50% of steel enterprises will be eliminated. He said that China has a billion tons of steel scale, what kind of economic structure can support such a supply. Our generation is bound to see great changes in the steel industry, and in the next few years, 30, 40 or even 50 percent of steel companies will be eliminated by market competition.
As early as a year ago, Li Chaopo, chairman of the Dedicated Group, said bluntly at the 19th internal retreat that the steel industry has entered the whole industry into losses, and the loss has not seen the head and the extent has not seen the bottom. Until 30% of the steel enterprises shut down, the steel industry can enter a state of break-even and normal operation.
' Only two types of steel companies can survive:one is a good location; The second is good management. Now the steel war has begun, the incandescent competition has been launched, into the sword battle, who dies who lives in the moment, the battle lasts at least 5 years or so, is a big reshuffle, big integration. ' In this speech, Li Chuanpo judged the future situation.
02
Disappeared:Steel demand restructuring
This year is the first year of the 14th Five-Year Plan, and it is also the first year of the epidemic prevention and control policy. All walks of life have high hopes for 2023, and people hope that after the haze of the epidemic clears, they will fight for a turnaround.
Under strong expectations, steel prices have been ' soaring ' since the Spring Festival. However, the good times are not long, in the face of high supply and weak demand reality, the steel market gradually entered the ' peak season is not prosperous ' weak demand verification period, the core of steel prices gradually changed from expectations to reality, from the middle of March to the end of May steel price trend, weak reality performance incisively and vividly, demand is expected to be falsified.
When the China Steel Network research team visited the market research, steel traders generally reflected that the demand for steel was poor, but the inventory was not high. The reason is that there are concerns about the current weakening of terminal demand. The question, then, is where the disappearing demand for steel has gone.
China Steel Network Information Research Institute invited analyst, Zhengzhou Steel Trade Chamber of Commerce steel pipe branch president, Henan Avenue to Jane Steel Co., LTD. Chairman Ren Xiangjun said that steel demand is directly affected by real estate, infrastructure investment, real estate new start stall depth, which is the most important aspect of steel demand, especially the lack of rebar demand.
From the demand side, the weak real estate industry data formed an overwhelming pressure on the market, the National Bureau of Statistics data show that since the second quarter, the real estate sales area, construction area, new construction area and other data are showing a year-on-year decline. From January to April, the housing construction area of real estate development enterprises fell by 5.6% year-on-year. New housing starts fell 21.2 percent. At the same time, the real estate industry is generally facing a shortage of funds, and the risk of guaranteeing the delivery of buildings is also high.
' The leading factor of the steel market situation this year is the reduction in demand for infrastructure and real estate, coupled with the current low-carbon green transformation, the need for steel is gradually transforming to high-precision steel, and the demand for ordinary steel and crude steel is reduced. However, special steels such as automotive steel and industrial machine tools are still in short supply. ' Ren Xiangjun said that with the continuous improvement of production requirements in the future, the steel industry to improve steel standards and precision has become an inevitable requirement, in this process, the industry will also set off a new round of survival of the fittest peak.
China Iron and Steel Industry Association Vice President Luo Tiejun in the ' China's steel demand structure change and trend outlook ' report proposed:in the past two years, China's steel consumption has declined significantly, is expected in the next few years, China's crude steel consumption will show a downward trend. At the same time, the structural change of steel demand is obvious, the future demand for steel structure, wind power and new energy automotive electrical steel and other fields will show growth, automotive steel will increase or decrease, and the investment direction of steel enterprises will have a significant impact.
Luo Tiejun said that through recent research, enterprises generally believe that the current steel market is unlikely to usher in a new round of upward trend after 2008 and 2015. From the real estate market shock downward inflection point, exports lead to the decline of indirect exports of steel, fiscal and monetary policy marginal effect weakened analysis of three aspects, crude steel consumption, production is difficult to hit a new high. Moreover, real estate is a key variable affecting steel demand, and rebar is a benchmark affecting the overall price trend of steel. If the entire industry does not carry out effective output control, the steel industry may hover on the edge of meager profit in the future, and even incur large losses.
03
Trend:New ' old ' demand superimposed
At present, China's steel industry has moved from the rapid growth period to maturity, overcapacity, homogenization and disorderly competition, low concentration, lack of discourse power in iron ore pricing and technology upgrading are the core factors plaguing the profitability of China's steel enterprises.
On the other hand, China's demographic dividend gradually disappeared, the inflection point of the real estate industry cycle has arrived, the total demand of the steel industry will slowly decline, while the recovery of developed economies after the financial crisis is slow, the export market is depressed, but also faced with India, Southeast Asia and other emerging economies low-cost competitive pressure, international trade friction is frequent, which is the problem faced by China's steel industry.
Mei Erya futures analysis said that the current lack of steel demand and the decline in real estate new starts have the most direct relationship, while the manufacturing industry chain in the continued recovery of consumption momentum weak influence is also difficult to get rid of the lack of order stability and hidden inventory pressure drag, in addition to the shortage of funds on demand there is a certain pressure, in the short term steel demand want to go out of the trough is still very difficult. Compared with the unrecoverable downward demand for construction steel, there is still hope that the manufacturing industry will gradually improve with economic repair in the medium term, and there is also marginal room for improvement in the second half of the year, so the toughness of the late demand for coil plates is still stronger than the thread.
At the 20th Shanghai Derivatives Market Forum ' Steel Forum ' , Fan Tiejun, president of the Metallurgical Industry Planning and Research Institute and deputy secretary-general of the China Iron and Steel Association, said in sharing the three major trends of ' steel demand ' that there are three major trends in the steel market ' steel demand ' in 2023.
One is falling demand for property. In 2022, the real estate industry declined significantly, the annual real estate development investment fell by 10% year-on-year, the new construction area and the square footage area fell by 39.4% and 72% year-on-year, respectively, and the steel consumption in the real estate industry was estimated to be about 240 million tons in 2022, down 11.4% year-on-year. It is expected that the real estate industry and steel consumption demand will be difficult to return to the peak level in 2020, and the overall trend is downward.
Second, the new demand has increased significantly:steel for new energy vehicles has increased significantly. In 2022, the annual production and sales of new energy vehicles increased by 90.5% and 93.4% respectively. Estimated steel consumption of about 11 million tons, an increase of about 90%.
The demand for new energy steel such as solar power continues to grow. In 2022, the newly added solar power installed capacity accounted for 62.6% of the total installed capacity (excluding nuclear power), an increase of 4.5 percentage points over 2021. It is estimated that the steel used for solar power new energy is about 6.5 million tons.
In the future, hydrogen energy will develop rapidly, and the development of steel for hydrogen energy transportation and storage will usher in new opportunities.
The third is the upgrading of traditional demand:steel structure industry steel demand to maintain rapid growth, in 2021 the national steel structure processing capacity of 97 million tons, an increase of 9.0%, estimated in 2022 steel structure industry steel consumption of more than 100 million tons.
Shipbuilding industry steel once again into the rising cycle, in 2022, the national shipbuilding completed 37.86 million deadweight tons, shipbuilding completed volume decreased by 4.6%, container ship completed volume compared with 2021 increased by 5.7 percentage points, comprehensive judgment in 2022, shipbuilding industry steel consumption of about 12.4 million tons, an increase of 42.2%.
04
Downturn:The paradox of ' high capacity ' and ' low demand '
Recently, the research team of China Steel Net went to the ' steel pipe capital ' Liaocheng, Shandong Province, and visited a number of local enterprises and a number of large steel markets to find that the downturn in the steel industry permeates the entire market.
' The market is not good, and there are long lines in several warehouses in this park on good days. ' A driver at a large steel market in the area said with a sigh, ' I thought things would be better this year, but a lot of heavy trucks have been empty recently. '
Since June, futures have rebounded strongly, but the spot price of seamless pipe has remained stable, as of June 30, the average price of domestic seamless pipe was 4,877 yuan/ton, up 22 yuan/ton from the average price of national seamless pipe 4,855 yuan/ton on May 31. Gao Qingwang, general manager of Xinpengyuan Intelligent Equipment Group Co., LTD., said that the main terminal demand is not good, and now the daily shipments are not as good as the same period last year, month-on-month is also declining, about a third of the current Xinpengyuan to maintain low inventory operation, sales set production.
Li Guangbo, senior analyst of China Steel Net Information Researcher, summarized the current predicament of the steel industry as high capacity, low demand and low sales. On the one hand, this year's steel exports increased significantly compared with last year, and exports increased by more than 10 million tons, hedging the situation of weak domestic demand. On the other hand, with the increase in the proportion of direct supply from steel mills, the toughness of terminal demand is still in, and the demand at the level of secondary terminal steel traders is weakened. At the same time, we also see that the stock of semi-finished billets is still on the high side. The inventory of China Steel net statistics is more of the five major materials, and the steel demand outside the five major materials this year is increasing compared with last year, such as steel and so on.
It is foreseeable that the situation of oversupply in the steel industry will not change in the short term, and the long-term core contradiction lies in the implementation of supply-side reform and the recovery of the global economy. After experiencing a short-term economic recovery in the first quarter, downstream demand, especially real estate, still has downward risks, and steel prices are under short-term pressure. China's steel production capacity is currently severely excess, and demand is expected to slowly decline in the next few years. In the long run, steel prices are mainly dominated by demand factors, with China's economic slowdown, especially the real estate industry long cycle turning point has arrived, steel demand will not reverse, at the same time, we should also be clear that the supply side reform resistance is not small, and is a long-term process.
Based on the judgment of the future steel demand and structural change trend, Luo Tiejun shared five thoughts on the development direction of the steel industry:Strengthen the industry self-discipline, work from the supply side, and maintain the balance between supply and demand; Green and low carbon promote the construction of electric furnaces and the use of scrap steel; The rapid development of new energy vehicles will have a profound impact on promoting the demand for high-quality steel; High-grade steel product competition will become more and more fierce; The survival pressure of single rebar production enterprises increases, and specialized and special new enterprises will be more vitality.
As the saying goes, ' There is no bad industry, only bad enterprises. ' As long as it ADAPTS to the direction of demand transformation and upgrading and maintains the relative competitive advantage and competitive position of the industry, it is expected to maintain a relatively reasonable and stable profit level.
The steel industry, as a mature industry, has a large probability of a downward trend in total demand, which is mainly for real estate, infrastructure and other fields of general steel demand will gradually decrease, but with the economic development driving force to high-end manufacturing, new energy, new infrastructure, new materials, low-carbon development, high-quality, high-performance, customized steel products will break out new demand. Demand prospects for new energy and new materials such as wind power, automotive high-strength steel, automotive thermoforming steel, high-grade non-oriented electrical steel, high-grade oriented electrical steel will continue to improve, and the growth potential is huge, and high-end plates and special steel wire bars in the steel industry will still be promising in the future.
