China's steel production growth and efficiency double transformation is imminent

Abstract According to the World Steel Association statistics, last year's global crude steel production of 15.5 million tons, up 1.2%; annual capacity utilization rate was 78.2%, down 1.7 percentage points more than in 2011. In the regions, production in the Middle East, Asia and North America has increased...
According to the statistics of the World Iron and Steel Association, the global crude steel output last year was 1.55 billion tons, up 1.2% year-on-year; the annual capacity utilization rate was 78.2%, down 1.7 percentage points from 2011. Among the regions, production in the Middle East, Asia and North America increased significantly, with declines in Europe, South America and Oceania.

From the perspective of the country, as the world's largest steel producer, China's crude steel output last year was 771 million tons, accounting for 46.3% of the world's total crude steel production. The countries ranked second, third and fourth were Japan, the United States and India, with output of 107 million tons, 88.6 million tons and 76.7 million tons respectively.

China's steel production growth rate, efficiency double drop

Crude steel production rises first and then falls. Last year, China's pig iron and crude steel were 658 million tons and 771 million tons respectively, up 3.7% and 3.1% respectively, and the growth rate of crude steel output was 5.8 percentage points lower than the previous year. From last year's situation, steel production in the first half of the year showed an upward trend, and it fell back in the second half of the year. The average daily output of crude steel was 1.958 million tons.

Steel exports increased imports. Last year, China exported 55.73 million tons of steel, up 14% year-on-year; imported 13.66 million tons, down 12.3% year-on-year. Imported steel billet was 360,000 tons, down 43.3% year-on-year. In total, the net exports of crude steel were 44.4 million tons, an increase of 9.61 million tons from the previous year, an increase of 27.6%.

Steel inventories fell for 10 consecutive months. Last year, the social stocks of 26 major steel markets, five steel plate, cold-rolled sheet, hot-rolled sheet, wire and rebar in the country showed a trend of rising and falling. At the end of December, the steel social inventories were 11.88 million tons, which decreased for the 10th consecutive month. Compared with the highest in February of the year, the cumulative decline was 7.06 million tons, a decrease of 37.3%.

Steel prices fluctuated downward. In the first eight months of last year, steel prices showed a trend of rising first and then falling. In the last four months, the steel market rebounded slightly and then fell slightly. Last year, the CSPI steel composite price average index was 111.76 points, an average decrease of 19.28 points over the previous year, a decrease of 14.71%.

Iron ore prices rose rapidly at the end of the year. Last year, China imported 744 million tons of iron ore, an increase of 8.4% year-on-year. The average import price was US$128.6/ton, down by US$35.4/ton from the previous year. Imported iron ore prices have been oscillating after falling to the lowest point in three years at the end of September. At the end of December, iron ore prices rebounded rapidly to nearly $160/ton.

The economic benefits of enterprises have fallen sharply. Last year, China's key statistical steel enterprises realized a total sales income of 35,441.10 billion yuan, profits and taxes of 74.089 billion yuan and total profit of 1.581 billion yuan, down by 4.31%, 54.33% and 98.22% respectively over the same period of the previous year. From last year's situation, the whole industry suffered losses in January and February, slightly profitable in March-May, and losses occurred in June-September, and improved in October-December. In the case of sluggish markets and rising prices of raw materials such as iron ore, the profit margin of large and medium-sized steel companies last year was only 0.04%.

The growth rate of fixed asset investment declined. Last year, the investment in China's ferrous metal mining and dressing industry was 152.9 billion yuan, a year-on-year increase of 23.7%, an increase of 5.3 percentage points over the previous year; the investment in ferrous metal smelting and rolling industry was 505.5 billion yuan, down 2% year-on-year. Increased by 14.6%.

Predicting the situation of the steel industry this year

The demand situation has improved, but it is still not optimistic. Luo Baihui, secretary-general of the International Association of Mould & Hardware Plastics Suppliers, said that in the fourth quarter of last year, China's economy has shown a good momentum of stabilization and recovery, providing favorable conditions for the steel industry to maintain a stable development this year. Overall, the operating environment of the steel industry in the first quarter of this year is better than last year, and steel demand will increase. However, due to the large production base of the steel industry, the situation of oversupply in the market has not changed significantly.

Production costs continue to rise, making cost reduction and efficiency more difficult. Luo Baihui believes that the US, Europe and Japan have successively introduced quantitative easing policies, which have promoted a new round of international commodity prices such as iron ore and coal. This year, China will increase energy conservation and emission reduction efforts, and the pace of reform of resources, energy prices, fiscal and taxation will be further accelerated, and enterprises' investment and operating costs in energy conservation and environmental protection will increase. In addition, the tight financial situation of enterprises will continue this year, and the cost of capital will continue to rise.

Trade frictions have increased and steel exports have become more difficult. Luo Baihui pointed out that there were 9 trade remedy investigations on China's steel products last year, which showed an explosive growth trend, and the countries and regions where trade remedy investigations started changed. The anti-dumping and countervailing investigations against China were initiated by the United States and Canada, and then spread to the EU and Australia. At present, ASEAN countries and Brazil have gradually become the main sponsors. The pace of world economic recovery this year is still slow, and it is expected that China's steel products exports will encounter greater resistance.

"China's steel industry has achieved remarkable results in recent years and has become a veritable steel power." Luo Baihui believes that the current steel industry's overcapacity and sluggish operation have made the restructuring and transformation of China's steel industry It is imperative.

As early as October 2011, the Ministry of Industry and Trade issued the "Twelfth Five-Year Development Plan for the Iron and Steel Industry" to clarify the development strategy and goals of the steel industry and clarify the development priorities. Among them, the key areas and tasks during the "Twelfth Five-Year Plan" period were explained in nine aspects, such as accelerating product upgrading, deepening energy conservation and emission reduction, strengthening technological innovation and technological transformation, and eliminating backward production capacity. It is necessary to draw on and introduce foreign advanced technologies and management methods in the process of achieving the planning objectives, which will also make the transformation and upgrading of China's steel industry more smoothly.

I hope that China's steel industry can achieve the goal of transformation and upgrading, and truly become a steel power, and is willing to contribute to the development of China's steel industry.

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