Construction steel prices pick up to eliminate backward production capacity and increase resistance

Shortly after the release of the "Improvements in the Adjustment and Rejuvenation Plan for the Steel Industry", the Ministry of Industry and Information Technology recently issued an "Informal Containment on Curbing the Rapid Growth of Production in the Iron and Steel Industry" to the competent authorities at various levels. According to the Shanghai Business Daily, the industry believes that the construction steel price has gradually risen in the past two weeks, which has led to increased resistance to the elimination of backward production capacity in the domestic steel industry. While the government has eliminated heavy blows to eliminate backward production capacity and allowed the steel industry to enter the fast lane, traders should also adjust their own products and methods.

Demand slows output and increases

According to sources in the steel industry, the Ministry of Industry and Information Technology's “Emergency Report on Curbing the Rapid Growth of Production in the Iron and Steel Industry” mainly describes the basic operation of the Chinese steel industry in the first quarter of this year, the current situation and problems faced by the steel industry, and the curbing of the output of the steel industry. Specific measures for rapid growth.

The Ministry of Industry and Information Technology believes that the excessive growth of steel production has become the most important issue facing the entire steel industry. It is worth noting that the root cause of the increase in output is that domestic steel mills have not reduced their production plans this year due to slowing demand. “From the production plans formulated at the beginning of the major steel mills, the vast majority of production has not been significantly reduced. Coupled with the input of new steel production lines and the resumption of production of small and medium-sized steel mills, the major steel mills have largely offset the The reduction in output after the production restriction policy. In addition, from the comparison of domestic and international steel production, the dispersal of domestic steel production capacity has a very negative impact on the control of steel production.” Industry experts told reporters.

Steel prices rebounded from losses in small and medium steel companies

The output is not reduced and the steel price is increased. So far, major domestic iron and steel companies have not yet shaken off their losses.

Statistics show that in the first quarter of the 72 large and medium-sized iron and steel enterprises, 25 companies suffered losses, with a loss of 34.72%, an increase of 23.61 percentage points over the same period of last year. Among the 72 large and medium-sized steel enterprises included in the statistics, the sales revenue of products in the first quarter of this year was 449.95 billion yuan, a year-on-year decrease of 21.74%; the profits and taxes were 12.363 billion yuan, a year-on-year decrease of 83.07%; and the overall profit loss was 33.08. Billion yuan, a sharp contrast with the realized profit of 44.16 billion yuan in the first quarter of the previous year.

However, the recent steel prices have seen a three-week rally in a row, including construction steel. “Although the current steel industry in China is still in a deficit state, due to the decline in prices of upstream raw materials and the rebound of steel prices in January and April this year, many small and medium-sized enterprises have the opportunity to turn losses into losses. Under such circumstances, backward production capacity. The elimination of resistance has begun to increase again.” Li said that under the influence of the national economic stimulus policy, banks added a large amount of new loans to the market in the first quarter. While the economy is still in the recovery phase, this has indeed given rise to a large pull in demand for steel. Some small and medium-sized steel companies with backward production capacity have tried to obtain a respite from bank loans.

The government issued two heavy punches in administrative finance

According to the report disclosed by industry sources, “Industry authorities in various regions must work closely with the relevant departments and order them to be put on the list of outdated ironmaking, steelmaking, and rolling mills to stop production. The ban on production has stopped.” In response to attempts by small and medium-sized steel enterprises to obtain respite from bank loans, the Ministry of Industry and Information Technology also pointed out: “Further efforts should be made to increase the convergence between banks and enterprises, and iron and steel companies that have lagged behind steel companies and disregard market demands will have to ask local commercial banks to reduce or stop their efforts. loan".

Industry insiders believe that the implementation and speed of the elimination of backward production capacity in the steel industry will rise to a new level. For the circulation market, traders should actively adjust their own products and methods of operation and follow the trend of change. In addition, the implementation of the spirit of the “Notification” will also play a very positive role in stabilizing the prices of domestic steel products, especially those of overcapacity products.