China Iron and Steel Association: situation faced by iron and steel industry operation and annual forecast

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China Iron and Steel Association: situation faced by iron and steel industry operation and annual forecast

Seize opportunities based on advantages

Strive to promote high quality development of iron and steel industry

October 26, 2020

This year, in novel coronavirus pneumonia epidemic situation and the complex and severe domestic and international environment, under the strong leadership of the Party Central Committee with Comrade Xi Jinping as the core, the "six guarantees" and "six stability" policies have been implemented. The domestic epidemic has been effectively controlled, and the national economy has continued to stabilize and recover. The iron and steel industry has conscientiously implemented the decision-making and deployment of the Party Central Committee and the State Council, adhered to the "double line" response of epidemic prevention and control and stable operation, and maintained the industrial operation trend of stable growth of production, slight price recovery and gradual improvement of efficiency, but it also faces difficulties such as high price of raw materials and fuel, rising cost and falling export.

1、 Operation characteristics of iron and steel industry in the first three quarters

Iron and steel production remained stable and output increased slightly. According to the data released by the National Bureau of statistics, from January to September, China's crude steel output was 781.59 million tons, a year-on-year increase of 4.5%; pig iron output was 665.48 million tons, a year-on-year increase of 3.8%; steel output was 964.24 million tons, a year-on-year increase of 5.6%. In terms of quarter, crude steel output increased by 1.2% in the first quarter, 1.7% in the second quarter and 10.3% in the third quarter.

The rapid recovery of downstream industries has led to an obvious increase in demand. It is estimated that the apparent consumption of crude steel from January to September was 769 million tons, with a year-on-year increase of 8.94%, 1.7 percentage points higher than that of January August. The start of major national investment projects and the rapid recovery of downstream industries such as automobiles and household appliances have boosted the demand for steel, and the steel industry has played an important supporting role in the recovery of the national economy.

The export of steel decreased sharply and the import increased significantly. According to the data released by the General Administration of customs, from January to September, China exported 40.39 million tons of steel products, a year-on-year decrease of 19.6%, an average export price of 822.07 US dollars / ton, a year-on-year decrease of 0.9%; a cumulative import of 15.07 million tons of steel, a year-on-year increase of 72.2%, and an average import price of 813.24 US dollars / ton, a year-on-year decrease of 31.5%. In terms of the trend, the export of steel is declining month by month, while the imported steel is increasing. If the increase of imported billet is taken into account, the net import of crude steel in China will appear from June to September. This is not only affected by the shrinking demand in the international market, but also driven by the booming demand and relatively stable price in China.

Steel prices have gradually rebounded, and the overall level is lower than last year. China's steel price index (CSPI) was 105.99 points at the end of September, down 0.09% year-on-year, according to the monitoring of the association. Among them, the long wood index was 108.74 points, a year-on-year decrease of 2.76%; the plate index was 105.50 points, with a year-on-year increase of 3.19%. From January to September, the average price index of steel was 102.44 points, a year-on-year decrease of 5.66%. From the monthly situation, since April, steel prices have been rising month by month.

The import of iron ore increased year on year, and the price rose rapidly. From January to September, China imported 868.46 million tons of iron ore, a year-on-year increase of 10.8%. Since June, China has been importing more than 100 million tons of iron ore for four consecutive months. In September, China imported 108.55 million tons of iron ore, an increase of 8.16% on a month on month basis; the average import price was $110.75, up 7.08% month on month, continuing to run at a high level. At the end of September, the port inventory of imported iron ore was 119.07 million tons, up 10.4% from the low at the end of June.

According to the price index monitoring of the Steel Association, at the end of September, the steel price only increased by 9.7% compared with the low point at the end of April, while the imported iron ore price increased by 39.8%; compared with the same period last year, the steel price index decreased by 0.09%, while the imported iron ore price increased by 31.25%. The price increase of imported iron ore is far greater than that of steel, which is the main factor restricting the improvement of economic benefits of enterprises.

The enterprise benefits continued to improve, and the year-on-year decline was significantly narrowed. According to the statistics of the Steel Association, from January to September, the sales revenue of iron and steel enterprises was 3397 billion yuan, with a year-on-year increase of 5.44%; the sales cost was 3066.1 billion yuan, with a year-on-year increase of 6.13%, and the cost growth was 0.69 percentage points higher than that of the income growth; the profit and tax realized 207.9 billion yuan, a year-on-year decrease of 7.27%; the total profit was 137.5 billion yuan, with a year-on-year decrease of 9.46%, showing a significant narrowing trend; The average profit margin of sales was 4.05%, with a year-on-year decrease of 0.66 percentage points. From the perspective of month by month, the profit of June, July, August and September has achieved a year-on-year positive growth. At the end of September, the asset liability ratio of iron and steel enterprises was 63.30%, a year-on-year decrease of 0.53 percentage points.

Adhere to green development and energetically save energy and reduce emissions. While actively responding to the epidemic situation and stabilizing production and operation, iron and steel enterprises continue to increase investment in environmental protection, actively promote the transformation of ultra-low emission, and further improve energy-saving and environmental protection indicators. According to the statistics of the Steel Association, from January to September, the comprehensive energy consumption per ton of steel in key statistical enterprises was 551.54kg standard coal / ton, a year-on-year decrease of 0.05%; fresh water consumption per ton of steel decreased by 4.33%; chemical oxygen demand decreased by 10.68%; sulfur dioxide emission decreased by 15.43%; utilization rate of steel slag and utilization rate of gas increased year on year.

2、 Situation faced by industry operation and annual forecast

At present, novel coronavirus pneumonia has been achieved in China, and the economic recovery has been driven by the rapid economic recovery. In the later stage, the economy has been developing well for a long time, the market space is broad, and the development toughness is strong. The reform of market-oriented allocation of factors is further deepened. The effect of the "six stabilities" and "six guarantees" policies and measures is gradually emerging, which will provide a better external environment for the production and operation of the iron and steel industry. In addition, China has built the most complete and complete iron and steel industry system in the world, with industrial advantages of relatively complete industrial chain, relatively high degree of marketization, strong technical autonomy, and favorable conditions of "system advantages, policy space, market potential, industry foundation, investment direction and reform goal", the iron and steel industry will remain stable.

Crude steel output and steel consumption will maintain a year-on-year growth. In the fourth quarter, China's economy will still maintain the growth trend. Driven by the implementation of the national "six stability" and "six guarantees" policy, the demand for downstream steel will continue to recover. However, with the cold weather in the north, the intensity of steel demand will decline, and the growth rate of steel production will fall. According to the statistical calculation of the tenth day report of the association of steel and iron, the daily output of crude steel in the country was about 3.05 million tons in the first ten days of October, with a slight decrease in the ring ratio. It is estimated that the annual crude steel output will exceed 1 billion tons, with a year-on-year increase of 3-5%.

It is difficult to reverse the downward trend of steel export and sharp increase of import in the whole year. Since June, due to the difference between domestic and foreign market demand and market price, China has imported crude steel net for four consecutive months. With the phased recovery of overseas market and gradual narrowing of steel product price difference, China's steel import volume will decrease month on month in the fourth quarter, and steel export will pick up. It is estimated that the export volume of steel products in the whole year will decrease by about 15%, and the import volume will increase by about 60%.

Market expectations are cautious and optimistic, steel prices are expected to be stable. According to the investigation and discussion of the members of the association, in the fourth quarter, the orders of enterprises were full and most of them were cautious and optimistic about the market trend. From the cost point of view, it is difficult for steel prices to drop significantly. From the perspective of supply, steel prices are also difficult to rise significantly. The steel price will be relatively stable and will continue to show a small wave dynamic potential.

The pressure of enterprise cost is rising, and it is more difficult to improve efficiency. At present, the prices of iron ore, coal, coke and scrap steel are at a high level and are on the rise, and enterprises are facing the pressure of rising costs. It is difficult for iron and steel enterprises to improve efficiency when steel prices are difficult to rise substantially. It is estimated that the profit of iron and steel enterprises is expected to reach about 180 billion yuan in the whole year, with a slight decrease or flat year-on-year.

3、 Key work of the industry in the next stage

In the face of the new development pattern promoted by the state, which takes the domestic big cycle as the main body and the domestic and international dual circulation promote each other, the iron and steel industry, on the basis of adhering to the supply side structural reform, should seize the strategic basis point of expanding domestic demand, base on advantages and seize opportunities, so as to better lay out high-quality development, and become the backbone of smooth national economic cycle and build a new development pattern 。 Specifically, we should focus on the following aspects:

First, strengthen industry self-discipline and effectively control the release of production capacity. Maintaining the balance of supply and demand in the domestic market is the key to the smooth operation of the iron and steel industry. Iron and steel enterprises should seize the opportunity of China's economic recovery, actively adapt to market changes, reasonably arrange the production rhythm, optimize the product structure, fully meet the new demand generated by the new development pattern with domestic large cycle as the main body and domestic and international double cycle promoting each other, improve the adaptability of the supply system to domestic demand, and form a higher demand led by demand and created by supply Horizontal dynamic balance.

Second, we should carry out benchmarking and tapping potential, and vigorously reduce costs and increase efficiency. Through strengthening management and system optimization, we should dig deep into the internal potential of the enterprise, improve the product quality, increase the added value of the product, and effectively digest the adverse factors such as the rising cost, so as to improve the economic efficiency and overall operation efficiency of the enterprise. It is necessary to strengthen capital management, improve the efficiency of fund utilization, adhere to the business principle of "no money, no delivery", prevent capital risks and further control the debt level of enterprises.

Third, promote the transformation of ultra-low emissions and strive to achieve low-carbon development. Efforts should be made to complete the transformation of ultra-low emissions, strengthen the operation and management of environmental protection facilities, achieve stable emission standards, and make efforts to win the "blue sky defense war". Entrusted by the Ministry of ecology and environment, all iron and steel enterprises that have completed the monitoring and assessment of ultra-low emission shall be publicized on the official website of China Iron and Steel Industry Association. With carbon emission management as the starting point, we will effectively promote the elimination of excess capacity, short process steelmaking by EAF, and research and development of advanced low-carbon technologies, so as to achieve low-carbon green development.

Fourth, accelerate merger and reorganization and optimize industrial layout. Through the merger and reorganization of enterprises, we should build an innovative pattern of division of labor and cooperation, effective competition and common development, improve the ability to cope with market crisis in a coordinated manner, create advantageous enterprise groups at different levels, cultivate leading enterprises with global influence, regional appeal and professional influence, and promote cooperation and progress in production capacity, technology, energy conservation and environmental protection, and management.

Fifth, focus on fundamental tasks and promote high-quality and sustainable development of the industry. We will continue to focus on the fundamental task of comprehensively improving the industrial base and industrial chain level, adhere to the two development themes of green development and intelligent manufacturing, focus on solving the three major pain points of controlling the expansion of production capacity, promoting industrial concentration, and ensuring resource security. We will continue to promote the process of internationalization, strive to promote relevant work, promote quality change, efficiency change and power change, so as to achieve higher quality and more effective We should develop in a more equitable, sustainable and secure way.

(editor in charge: Mo Jinghan)