The latest annual report: steel price in 2019 may not come again!

From December 14 to 16, 2018, the annual meeting of China's iron and steel market outlook and "My Iron and Steel" was held in Shanghai International Purchasing Exhibition Center.

At the Theme Conference on the 15th, Wang Jianhua, chief steel analyst of iron and steel network, delivered a keynote speech entitled "China's iron and steel market is no longer coming in 2019 - Review and outlook of steel market trend".

Looking back at the iron and steel market in 2018, Wang Jianhua summarized six aspects as follows: stable price, steady profit, steady supply and demand, steady improvement of efficiency, steady leverage and steady improvement of environmental protection level.

According to Mysteel monitoring, in 2018, the peak comprehensive price of steel fell, only the composite index of medium and heavy plate, welded steel pipe and special steel reached a new high. Wang Jianhua introduced that steel prices in 2018, in addition to the three waves of big declines in early, March and November, are in a concussive upward trend.

In terms of profit, the total profit of ferrous metal smelting and rolling industry reached 355.28 billion yuan from January to October 2018, an increase of 63.7% over the same period last year. From the point of view of variety, building materials are better than slabs; Pugang is better than excellent steel.

In terms of supply and demand, the national output of iron, steel and timber reached 64.56 million tons, 78.24 million tons and 91.84 million tons from January to October 2018, respectively, increasing by 1.7%, 6.4% and 7.8% respectively. Wang Jianhua said that the consumption of building materials in 2018 was stronger than that of industrial materials; the demand for iron and steel in 2018 showed both elasticity and resilience in spring and summer, with obvious seasonal characteristics.

Speaking of efficiency and environmental protection, Wang Jianhua said that in 2018, the comprehensive yield of steel enterprises, utilization coefficient of blast furnace, consumption of converter steel materials and operational efficiency have been improved. At the same time, the level of comprehensive utilization of waste water, waste gas and waste residue in iron and steel industry has also been improved.

Looking ahead to 2019, Wang Jianhua believes that the steel market is no longer coming.

Firstly, Wang Jianhua expects the global macroeconomic pressure to decline in 2019, but the probability of economic crisis outbreak is small. Considerations are mainly based on the following three aspects: sustained interest rate hikes and trade frictions in the United States have far-reaching impact, but the position of the dollar is weakening; the impact of China's economy has increased, and it is currently in a "three-step" decisive period; the consensus of other economies has been strengthened, and the ability of concerted action has been enhanced.

In terms of domestic economy, Wang Jianhua believes that China's macro-economy has changed from a stable one to a stable one. If we want to stabilize economic growth, he put forward the "1 + 2" point of view: to activate market vitality as the center, to appropriate leverage infrastructure, moderate relaxation of real estate regulation and control as two basic points. He believes that one of the biggest problems in China is the weak demand. The key to boosting consumption is to stimulate the vitality of the capital market. At the same time, the development of private economy stimulates the vitality of factor market.

In terms of steel demand, Wang Jianhua estimates that the apparent consumption of crude steel in China will reach 880 million tons in the whole year of 2019, an increase of 0.45% over the same period last year. He is still optimistic about building materials. From the perspective of regional market, Fujian and Guangdong have relatively good consumption performance, followed by East China, Shaanxi and Hebei. It is expected that China's steel direct exports will increase slightly in 2019, while indirect exports will fall slightly.

According to Wang Jianhua, China's supply is expected to increase steadily and slightly in 2019, and Southeast Asia is the region with the greatest added capacity in the future. According to the OECD report, by 2020, the world is expected to have about 52 million tons of new capacity in construction and 39 million tons of new planned capacity in production; Southeast Asia may release about 16 million tons of capacity in the future.

In terms of raw materials, Wang Jianhua expects to break away from the trend of differentiation in 2019, the average coke price has a small probability of rising, and the average iron ore price and scrap steel price may decline.

For the trend of steel price in 2019, Wang Jianhua believes that, on the one hand, it is difficult for steel price to fall sharply in theory under the background of low inventory. Every high price of steel periodically falls, the inventory of finished products in industrial enterprises is at a relatively high level (more than 15%). At present, the inventory data of finished products in industrial enterprises is at a historical low level of 9.7%, which is at a historical low level.

On the other hand, from the relationship between currency and steel price, it is inevitable that steel price will fall. M1 growth fell to 1.5% year-on-year in November, suggesting that demand is extremely depressed and steel prices should remain under pressure in the coming months.

Looking ahead to the iron and steel market in 2019, Wang Jianhua predicts that the profit of the iron and steel industry will decline in 2019, and the average price of comprehensive steel will decline by about 10%.

If steel market prices continue to oscillate to the bottom before the Spring Festival of 2019, Wang Jianhua expects a rebound after the Spring Festival. The main reasons for promoting this market are the transfer of inventory, the release of seasonal demand, and the release or gradual realization of favorable national macro-control policies.

Finally, in view of the development path of the steel industry in the new era, Wang Jianhua puts forward the following suggestions: macroscopically speaking, China's economy has changed from the stage of high-speed growth to the stage of high-quality development, and the steel industry has entered a new stage of high-quality development. In the medium term, enterprises should actively improve the industrial concentration; strive to reconstruct the marketing relationship; seize the opportunity to layout the combination of industry and finance. From the micro point of view, enterprises should develop with high quality, keep abreast of market changes and grasp the development trend of the industry.

(Source: ITU Information)

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