company news about Can manufacturing investment growth lead to drive steel demand?

Steel demand is highly correlated with fixed asset investment. In the first quarter of this year, the national fixed asset investment (excluding farmers) was 10,487.2 billion yuan, a year-on-year increase of 9.3%. In terms of different fields, infrastructure investment (excluding electricity, heat, gas and water production and supply industries) increased by 8.5% year-on-year, manufacturing investment increased by 15.6%, and real estate development investment increased by 0.7% year-on-year.

Among the three major areas of fixed asset investment, the growth rate of manufacturing investment is leading, significantly faster than the growth rate of all investment, which is the main driving force for the growth of fixed asset investment, and the driving force of investment on steel demand has also changed.

Manufacturing investment continues to grow rapidly

In 2021, manufacturing investment will increase by 13.5%, infrastructure investment will increase by 0.4%, real estate development investment will increase by 4.4%, and manufacturing investment will lead the growth rate; on average, manufacturing investment will increase by 4.8%, 0.9 points higher than all investment. percentage point.

Since the beginning of this year, various regions have actively promoted the construction of major investment projects in the manufacturing industry, and large projects such as new energy vehicles and integrated circuits have been started in many places. At the same time, the market demand for equipment and high-tech industries has expanded, supporting the acceleration of manufacturing investment. In the first quarter, investment in high-tech manufacturing increased by 32.7%, of which investment in electronics and communication equipment manufacturing, medical equipment and instrumentation manufacturing increased by 37.5% and 35.4% respectively.

With the green and low-carbon transformation and intelligent development, the investment in technological transformation of enterprises is accelerating. From January to February this year, the technological transformation investment of manufacturing enterprises increased by 27.2% year-on-year, which was 6.3 percentage points higher than the growth rate of all manufacturing investment; technological transformation investment accounted for 41.7% of all manufacturing investment, an increase of 2.1 percentage points over the same period in 2021. percentage point.

Due to industrial upgrading and demand expansion

Manufacturing investment has grown rapidly since last year. On the one hand, it is driven by demand expansion factors such as the recovery of domestic demand and exports exceeding expectations. On the other hand, it is also the result of internal optimization and upgrading of the manufacturing industry. The investment in technological transformation of traditional industries has maintained rapid growth, and the high-tech manufacturing industry has maintained rapid growth. The rapid growth of investment has contributed significantly to the total investment in the manufacturing industry.

At the same time, the policy encourages the flow of capital to the manufacturing industry, the manufacturing enterprises have strong financing capabilities, and the medium and long-term loans to the manufacturing industry have maintained rapid growth. At the end of March, the balance of medium and long-term loans to the manufacturing industry increased by 29.5%, 18.1 percentage points higher than the growth rate of various loans. , of which the balance of medium and long-term loans for high-tech manufacturing increased by 31.9%.

There is still growth potential in the future

At present, the middle and downstream industries of the manufacturing industry are facing cost pressure, and export demand may fall, which will affect the willingness of enterprises to invest, and the rapid growth of manufacturing investment may slow down.

The growth rate of investment in the manufacturing industry is faster than that of all investment, which is a manifestation of the optimization of the economic structure and the transformation of the driving force of economic development. Manufacturing investment is an important factor determining future economic growth potential. The national "14th Five-Year Plan" proposes to keep the proportion of manufacturing industry basically stable, and manufacturing investment has become an important support for stabilizing investment and stabilizing the economy.

At the recent press conference of the National Development and Reform Commission, the relevant person in charge said that this year, it is necessary to coordinate and increase financing support for key projects, promote the rapid growth of medium and long-term loans in the manufacturing industry, study and reserve new policy plans, actively expand effective investment in manufacturing, and give full play to manufacturing. The supporting role of industrial investment in stabilizing economic growth. With the transformation and upgrading of traditional industries and the growing momentum of innovation and development in emerging industries, coupled with strong policy support, manufacturing investment still has growth potential.

How to drive steel demand

The growth rate of investment in the three major areas of fixed asset investment is differentiated, and the driving force of investment on steel demand has also changed. Since last year, the changes in the output of major steel varieties also reflect this trend of differentiation. After the output of rebar and wire rod with infrastructure and real estate as the main downstream products fell year-on-year last year, the first quarter of this year still showed a year-on-year downward trend.

The rapid growth of investment in manufacturing can indirectly drive steel consumption through equipment demand. The demand for equipment in manufacturing investment includes general equipment and special equipment required for production in various industries. General equipment includes industrial robots, machine tools and other products, while professional equipment is used in a certain industry or specific products, and there are many categories.

Due to the large number of subdivisions and product categories in the general and special equipment manufacturing industry, the industry space is large, the enterprises are scattered, and the average scale is small. Etc., the growth of manufacturing investment will drive the demand for these steel varieties, especially in the context of encouraging the specialization and new development of the manufacturing industry, equipment enterprises are the main force among them, and the demand for the above-mentioned varieties of high-quality special steel will increase.