Source: China Metallurgical News
With the introduction of carbon peak and carbon neutral targets, environmental protection and production restrictions throughout the country have continued to increase. Guo Xiaoliang, assistant to the general manager of Delong Steel, is deeply touched by this. On March 19, Guo Xiaoliang said in an interview with a reporter from China Metallurgical News: 'In 2021, the production restriction policy in Tangshan and even the entire Hebei area has become stricter and stricter. From the initial stage of production reduction, production restriction, and production suspension, Up to now, some blast furnaces have been shut down and dismantled, and the implementation of the production restriction policy has continued to increase, and the actual implementation has been better than in previous years. There is zero tolerance for the problem of fraudulent production records of steel enterprises.
Guo Xiaoliang believes that the current operation of the steel market mainly exhibits the following characteristics:
One is the obvious impact of environmental protection and production restrictions. Tangshan City, as a major steel town in my country, accounts for almost half of the crude steel output in Hebei Province, and stricter environmental protection has a greater impact on steel output in Tangshan. According to the calculation of Tangshan City's crude steel production in 2020 and this year's 'Tangshan City's March Air Pollution Comprehensive Management Tackling Month Plan', it is estimated that the crude steel output will be affected by about 4 million to 5 million tons; if the annual total emission reduction target is implemented, It will affect more than 1/3 of the crude steel output in Tangshan.
'It is not ruled out that other regions may follow up and restrict production. At present, there are also government environmental protection personnel in Wu'an, Hebei.' Guo Xiaoliang said, 'The Ministry of Industry and Information Technology will follow-up to formulate a supporting plan to reduce crude steel output, which will further affect the later steel output. '
The second is the slowdown in social inventory growth. After the Spring Festival this year, affected by the call for 'Chinese New Year in situ', the progress of the resumption of downstream projects was earlier than in previous years. Entering mid-to-early March, with the rapid increase in construction sites and factory operating rates, the demand for steel gradually released, the growth of steel social stocks began to slow down, and the relationship between supply and demand in the market improved.
From the downstream industry perspective, the sales of excavators, loaders, internal combustion engines, automobiles and other products have maintained a substantial growth trend, and export demand has also maintained a high growth trend, which shows that the current domestic and foreign manufacturing demand is strong.
Third, the market has strong bullish sentiment. At present, the prices of raw materials and fuels such as iron ore have weakened, the spot price of coke has started the sixth round of downward adjustment, and the price of steel has remained high. On the whole, the current market has strong bullish sentiment, which is conducive to rising prices of finished products.
From the perspective of the international economic environment, the European Central Bank and the Federal Reserve have successively stated that monetary policy will continue to be loose in order to promote economic recovery. This is expected to form an indirect support for the prices of domestic black products. Guo Xiaoliang predicts that the market as a whole is expected to be 'easy to increase prices, but difficult to fall'.
Fourth, the status of downstream customers varies. Cold rolling customers received less orders after the Spring Festival, especially for export orders, which basically focused on digesting orders before the Spring Festival. Affected by the low price of steel pipes, steel pipe customers generally have relatively high inventories. According to the current strip steel prices, the pipe factory is in a state of inverted profits. In addition, steel prices have soared after the Spring Festival, and the fear of heights of the customers of the management plants has increased, and the enthusiasm of taking delivery has been greatly reduced. Guardrail customers are also in a situation of high raw material inventory and difficulty in receiving orders, and March is a low season for the guardrail market. Coupled with the continuous upgrade of environmental protection, guardrail customers have reduced production and increased the number of stoppages.
On the whole, driven by economic stimulus policies, capital markets and commodity prices have continued to rise. The domestic market generally has good expectations for the beginning of the '14th Five-Year Plan'. As major engineering projects in various regions enter the implementation stage, downstream steel demand will gradually be released, and the domestic market will enter the inventory decline channel. Driven by costs and demand, steel prices still have room to rise. However, Guo Xiaoliang reminded market participants that the current steel price has risen sharply, and the downstream demand capacity is obviously insufficient, and the high risk is increasing. It is expected that the steel market will fluctuate upwards in the long-term, and there will be adjustment pressures in the short-term.