company news about Social inventory declines, steel demand improves

The social inventory of steel continued to decline, while the demand side showed obvious signs of improvement. Industry insiders predict that in the short term, the domestic steel market will face a situation of gradually increasing supply and recovery of demand, and steel prices will rise slightly.

Increased capacity utilization

According to the market monitoring data of Lange Steel Network, on March 18, the national steel social inventory index was 173.5 points, a weekly decrease of 1.84%. On the same day, the social inventory of steel in 29 key cities across the country was 15.9878 million tons, a decrease of 298,200 tons or 1.84% in the week. According to data from the China Iron and Steel Association, in early March, the steel inventory of key national iron and steel enterprises fell by 6.7% year-on-year.

Chen Kexin, chief analyst of Lange Steel Economic Research Center, pointed out that since 2022, the national fixed asset investment and industrial production have both accelerated. While demand is growing steadily, the supply of new steel resources across the country has dropped significantly. In the first two months of 2022, the national crude steel output was 157.96 million tons, a year-on-year decrease of 10%; the steel output was 196.71 million tons, a year-on-year decrease of 6.0%; in the same period, the national imported steel was 2.207 million tons, a year-on-year decrease of 7.9%.

According to a research report by Guosheng Securities, the iron-making capacity utilization rate of 247 domestic steel mills has risen to 81.9%, and the overall steel production has risen to a high level. The production-restricted areas in the northern heating season will usher in centralized production resumption, and the capacity utilization rate will rise rapidly.

Iron ore prices drop

In terms of raw materials, as of March 18, the 58% Australian powder index was $117/ton, down $5/ton within the week. The 61.5% Australian powder index was $127/ton, down $7/ton in the week; the 62% Australian block index was $185/ton, down $2/ton in the week. Iron ore prices fell slightly.

Industry insiders believe that the current supply of iron ore is relatively abundant, the operating rate of steel mills has rebounded, but the willingness to replenish iron ore stocks is weak, and the probability of short-term fluctuations in iron ore prices is high.

Domestic mining and construction are accelerated. At present, the preparatory work for the West Anshan mining and dressing joint project of Ansteel Mining has been completed, various approval procedures have been accelerated, and construction will be fully started this year. The project's annual output of mixed iron ore is expected to reach 30 million tons.

The China Iron and Steel Association recently pointed out that it will strengthen the exploration and mining of iron ore, actively expand the overseas mineral import destinations, and ensure the supply of resources. At the same time, further increase the concentration of the steel industry, enhance the voice of enterprises, and increase the competitiveness and anti-risk capabilities of enterprises.

Increase industry concentration

Tangshan City, an important iron and steel city, recently issued a document calling for further improvement of industry concentration.

Tangshan City has made it clear that by 2025, the number of iron and steel enterprises (groups) in the city will be controlled within 20, and the output of the top 10 iron and steel enterprises (groups) will account for more than 80%. The proportion of high value-added steel products reaches more than 40%, the proportion of ordinary low-alloy steel and alloy steel reaches more than 30%, and the proportion of deep processing of hot-rolled sheets reaches more than 40%. Among local industrial steels, the market share of steel produced by Tangshan Iron and Steel Enterprises is about 75%.

At the same time, enterprises are encouraged to make substantial progress through the development of mixed ownership, the implementation of modern enterprise system reform, and the promotion of mergers and reorganizations, so as to realize the grouping of organizations. Support regional superior iron and steel enterprises to take the lead in merging and reorganizing other iron and steel enterprises and form iron and steel groups through wholly-owned acquisitions, capital increase and shareholding, cross-share swaps, etc.; guide small-scale, low-efficiency and weakly competitive enterprises to gradually withdraw or merge into superior iron and steel enterprises Enterprises; actively introduce domestic and foreign large iron and steel enterprises and strategic investors, and participate in the merger and reorganization of Tangshan iron and steel enterprises in various forms.

Previously, three departments including the Ministry of Industry and Information Technology issued the "Guiding Opinions on Promoting the High-Quality Development of the Iron and Steel Industry" to encourage leading enterprises in the industry to carry out mergers and reorganizations and build several world-class super-large iron and steel enterprise groups. Relying on the dominant enterprises in the industry, we will cultivate 1-2 professional pilot enterprises in the fields of stainless steel, special steel, seamless steel pipe, cast pipe and so on.

Encourage iron and steel enterprises to merge and reorganize across regions and ownerships, change the "small and scattered" situation of the iron and steel industry in some areas, and enhance the endogenous power of enterprise development.

According to the research report of brokerage companies, housing companies are expected to acquire land and start construction in the medium and long term, and the demand for long products is improving. At the same time, the overall production capacity of the steel industry is limited, and leading companies are expected to win more market opportunities.

Wang Guoqing, director of Lange Steel Economic Research Center, pointed out that the steel industry can enhance the endogenous power of enterprise development through mergers and acquisitions, and use synergies to promote the leap-forward development of enterprises after restructuring. The cross-regional and cross-ownership merger and reorganization of iron and steel enterprises is expected to change the "small and scattered" situation of the iron and steel industry in some regions. The breakthroughs in technology, environmental protection and low-carbon development of large iron and steel enterprise groups can be promoted within the group, and at the same time, synergies are formed in procurement, sales, supply chain systems, etc., which is conducive to the overall energy conservation and emission reduction of the iron and steel industry, cost reduction and efficiency improvement .