What is the prospect of overcapacity in the hottes

  • Detail

What is the prospect of overcapacity in the steel industry

In 1996, China's iron and steel output exceeded the 100 million ton mark for the first time, leaping to the first place in the world. Since then, China's steel output has increased year by year and ranked first in the world. Just as oil is the blood of industry and steel is the skeleton of industry, the rapid development of China's steel industry has made great contributions to the rapid advancement of China's industrialization. However, in the context of rebalancing of the world economy, the main problem of poor precision of China's lead screw exchange is overcapacity, and the problem of overcapacity in the steel industry has always been particularly prominent. In 2008, the annual output of iron and steel was 500million tons, but since then, China's iron and steel output has not decreased reasonably, but has continued to increase and repeatedly hit record highs. In October, 2008, the loss of domestic large and medium-sized section steel enterprises reached 5.835 billion yuan. By December, the loss had expanded to 29.122 billion yuan. The loss situation of the industry had been maintained until April, 2009 for seven consecutive months. In 2011, China's crude steel output exceeded 700million tons, an increase of 40% over 2008. There is a saying: at present, China's annual steel output is nearly half of the global output - in 2011, the world's steel output was only 1.49 billion tons! It is 4.159 million tons more than the total crude steel output of the countries/regions ranking second to 17th in the world. At the same time, the growth of consumption was lower than that of output, and both imports and exports increased, but the total export volume remained at a low level

the 4trillion yuan economic stimulus has made the domestic steel industry miss a necessary industry reshuffle, and on the contrary, it continues to go crazy. This mistake continues to enlarge the appetite of overseas iron ore to "eat China", and also makes the industrial bottleneck more prominent. In August, 2008, the imported iron ore reached 154.46 US dollars/ton, which felt like the sky high price at that time; During the subprime mortgage crisis in 2008, the price of iron ore once collapsed with the general trend, but it reached a staggering 175.92 US dollars/ton in September 2011! All this has long been decided that the delayed major adjustment of the iron and steel industry will be more violent, which is also the root of the painful experience of the upstream and downstream of the iron and steel industry

in fact, China should have taken the initiative to reduce production capacity and increase China's initiative in iron ore negotiation and pricing. However, it is a pity that the domestic steel production enterprises fighting on their own have not shown their due courage. From the perspective of economic law, it is only the inevitable result of time that the iron and steel production industry changes from brilliant performance, meager profit to comprehensive loss. This has finally proved that the decisive force to realize industrial structure adjustment is not the administrative slogan, nor the hand of the government, but the hand of the market

steel trade enterprises are in the middle reaches, and the trend of low profit inevitably requires timely change of business ideas and methods. For example, actively reduce inventory and speed up turnover efficiency. More importantly, there are two points: first, pay close attention to macroeconomic policies and adjust business strategies according to the economic cycle; The second is to innovate risk management methods and make full use of the information and hedging functions of the futures market. Enterprises that do well in these two aspects will generally smoothly cope with the adverse impact of the industry, and also lay a good foundation for the next step of transformation

under the superimposed influence of more than two years' macro-control and overseas sovereign debt crisis, the profits of steel enterprises dropped sharply in November last year. The total profits of large and medium-sized steel enterprises fell from 7.899 billion yuan to 1.375 billion yuan. Bond laminates will create up to 30 new jobs, down 82.6%. In January and February this year, the profit was a loss of 2.321 billion yuan and a loss of 548million yuan respectively. After that, the industry profits rebounded, but the situation continued to deteriorate in June. Shrewd steel traders have avoided losses by de stocking in time, and there are many cases of short selling in the futures market

looking into the future, major economies such as Europe, the United States and Japan may fall into a long period of sluggish growth, and the euro zone does not even rule out the possibility of deep recession, which is a severe test for China's economy. In the medium term, China's economy may therefore enter a sub growth stage represented by a lower growth rate. The central real estate regulation policy will not be easily reduced or cancelled, while the steel consumption in the construction industry accounts for more than 1/3, which means that the long-term demand for steel will be difficult to flourish; Some cities began to implement the automobile purchase restriction policy again, which read out the 2015 work plan of the special committee to chairman Guo of the already depressed steel industry: the negative impact is obvious. It is also understood that since the current round of steel price decline, iron and steel enterprises had a large-scale production reduction in the fourth quarter of last year, but after entering 2012, the capacity utilization rate has increased from 80% to 85% now. After the sharp decline of the spot market in 2008, the capacity utilization rate of iron and steel enterprises once dropped to less than 70%. Some experts in the iron and steel industry continue to look down on the rebar price to the 3600 line, not overly pessimistic. Of course, further policy observation is needed

the world iron ore price has recently declined and reached the lowest level since the end of last year, but its price is still high - falling back to US $141.16/t in may2012. At the end of June, it was $134/ton. Meanwhile, the international commodity currency exchange rate remained relatively strong. All this shows that foreign mineral enterprises' expectations of China entering a period of slow growth are still vague, and some people have illusions that China will have a large-scale economic stimulus plan. In my opinion, the bear market should not end until these illusions are disillusioned. In the future, with the end of the "flash in the pan" recovery of China's real estate market, China's steel mills that expanded production in the first half of the year will be forced to reduce production capacity again, and iron ore prices and steel prices will go down for another year. This judgment complements the author's view that China's economy will continue to bottom in the third quarter

China needs rational growth and anti-interference to make a difference. Even if it has to endure some transformation pain, it should learn from history and not interfere with the normal adjustment of the market. The iron and steel industry needs to lose weight, excessive production needs to be restrained, and traders also need to transform

in the early stage, the state issued relevant measures to clean up and regulate the financing of traders, which will undoubtedly promote the long-term healthy development of the whole industry. Some middlemen are in a "naked" state because of loopholes in fund management, and some enterprises even have broken capital chains, which is worthy of vigilance and learning lessons

some traders turn to invest in iron and steel production enterprises, which I think is inappropriate - in the long run, serious iron and steel production enterprises are not worth investing. Even if trade is becoming more and more difficult, traders should not simply "move up". As a strategic transformation, the combination of financial investment and internationalized business in the iron and steel industry is an optional general direction, and even a complete separation from the iron and steel industry is not impossible. After all, this is a typical industry that is very difficult to move towards balance in the long run. On the road of China's economic transformation, it is doomed to bear more pains and tribulations

Copyright © 2011 JIN SHI