The steel industry capacity will exceed 1 billion tons

“Production capacity may exceed 1 billion tons this year. Overcapacity is the 'crux' of the steel industry's dilemma.” Wang Xiaoqi, deputy chairman of China Iron and Steel Association, stated at the “The Third Steel Industry Operation Conference” held on the 14th that at present, The surplus of the steel industry has far exceeded the scope of reasonable competition. As a result, the domestic steel industry has a weak bargaining power. Upward prices of raw materials such as iron ore cannot be transmitted downstream through the price, and the entire market is rushing towards pricing and vicious competition.

According to him, China Iron and Steel Association recently conducted a special survey and found that the steelmaking capacity formed at the end of last year was 970 million tons, and this year's annual production capacity may exceed 1 billion tons. According to estimates, if the daily output of 1.93 million tons of crude steel is calculated, this year's annual output will be approximately 720 million tons. Even if the steel supply in the market is “oversupply”, the capacity utilization rate is only 70%.

It is worth noting that the “slow steel prices” and “high ore prices” brought about by excess production capacity have caused the steel industry to have a meager profit for the year and escape the fate of the three major mines. Wang Xiaoqi said that the steel price index had dropped to the lowest point of 98 at the beginning of September, basically the same level as in April 1994, while the iron ore index is currently at about 400 points, that is, the tonnage price of landfall from 1994 to 26 The dollar rose to about $110 to about $115, a four-fold increase.

“Iron ore, we are still subject to imports from abroad, although the country has a certain ability to check and balance, but the overall still not work.” Wang Xiaoqi told the “Economic Information Daily” reporter, on the one hand, several mines use their own advantages in the price push Up to work to gain interest, on the other hand, some financial capital, hot money speculation also contributed to the rise and fluctuations in ore prices.

The reporter learned from the port that on the 13th, India's 63.5/63% fines ore** price has broken the $120 mark, reaching $122 to $124 per ton, which is more than 40% higher than the lowest price, and the strong rally signal . In contrast, on November 9, the comprehensive steel price index was 106.01 points, which was an increase of 0.62 points or 0.59% from the previous month. Although steel prices have risen in the past two months, the rate is very small and still at a relatively low level. .

What is more worrying to Wang Xiaoqi is that the blind expansion of production due to overcapacity has caused the market to continue to exceed supply, and it has also caused the steel industry to become vicious and lose money. According to statistics from the China Iron and Steel Association, from January to September, member steel companies accumulatively produced 4395.061 million tons of steel, a decrease of 9.18.47 million tons over the same period of last year, a decrease of 2.04%. Since July, the steel output of the member steel companies has dropped month-on-month for three consecutive months. Compared with June, the rate of reduction in output was 8.39%. At the same time, non-member companies accumulatively produced 104.9092 million tons of steel from January to September, an increase of 15.77 million tons year-on-year, an increase of 18.63%.

"On the one hand, the output is not effectively controlled, and on the other hand, coupled with the high level of downstream industry concentration to negotiate bargaining power, leading to steel prices will not rise, ore prices will fall, so the steel industry is very bad days. "A person in charge of a steel company in Hebei complained to the reporter of the "Economic Information Daily." According to the statistics of the Iron and Steel Association, from January to September, large and medium-sized steel enterprises realized a total sales revenue of 2,625.50 billion yuan, a year-on-year decrease of 6.49%, and realized profits and taxes of 47.515 billion yuan, a year-on-year decrease of 66.84%. After a profit-and-loss offset, profits were -55.28 billion yuan. The same period last year was 83.692 billion yuan. The loss of the loss-making enterprises was 26.726 billion yuan, a year-on-year increase of 41.5 times, and the loss reached 45%.

For the later steel market trend, Wang Xiaoqi said that compared to the previous three quarters will be improved, especially in the contract signed by many steel mills in September when the low ore prices began in October, plus steel prices also from before 102 points rose to 105 points in October. According to a rough estimate, the profit per ton of steel will increase by about 150 yuan. On the other hand, the country has recently stepped up efforts to stabilize growth, and investment in fixed assets is expected to increase in the fourth quarter. It is expected that demand in the steel market will rebound from the first three quarters, but as steel production capacity is significantly greater than demand, steel prices rebound. Some equipment that has been shut down has started one after another. The situation of regional oversupply is difficult to avoid. At present, the rebound in steel prices is weak, and it is more difficult to maintain the upward trend. It remains to be seen whether the market can be stabilized.