China's steel supply may decline in the future

2022-07-29
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China's steel supply may decline in the future

with the decline of steel prices, the survival of steel mills is becoming increasingly difficult. With the decline of inventory, the cash flow per ton of steel production is negative, and the steel price will be poised at the bottom, while the "environmental storm" that is about to blow recently will push up the steel price from the bottom

According to the most stringent measures or the data released by the Ministry of environmental protection, 17 of the 20 cities with the most serious air pollution in January have steel enterprises, and the steel industry has an unshirkable impact on the current air pollution. Recently, it is rumored in the market that the most stringent measures against air pollution will be introduced, and "energy conservation and emission reduction" will be implemented against the iron and steel industry, such as strengthening the inspection of the built desulfurization equipment, supervising the normal operation of desulfurization facilities, and limiting the production and emission of iron and steel enterprises that are not equipped with desulfurization facilities or even stopping production. If the above measures are really introduced and implemented, it will have a huge impact on the iron and steel industry in Hebei. As the largest province in China, the decline in supply of iron and steel in Hebei will strongly support the steel price

supply may decline in the future

with the decline of steel price, the steel plant has a loss of nearly 300 yuan per ton of steel. The current steel price is close to the cash cost of the steel plant's aluminum pipe butt welded aluminum plastic pipe gb/t18997.2 ⑵ 003 aluminum plastic composite pressure pipe (butt welding) cj/t159 ⑵ 002. In fact, during the continuous decline of steel price, due to the inventory of raw materials and finished products, the loss of the steel plant is much greater than the production profit and loss measured in real time. According to the calculation of historical data, when the loss per ton of steel reaches 300 yuan/ton, the cash income of the steel plant will be negative, that is to say, the production of the steel plant will be reduced soon. From the recent data of blast furnace operating rate of Tangshan Iron and steel enterprises, it can be seen that recently, the blast furnace operating rate has remained around 91%, far lower than 98.65% at the beginning of the year. In fact, most of the steel enterprises we counted are relatively competitive steel plants with large scale, and the operating rate of some small steel plants is far lower than this. In particular, the market funds are relatively tight recently, and a few steel mills have closed down and stopped production due to the broken capital chain. Therefore, the supply of crude steel will decrease in the future

stock clearance has been completed

from the perspective of social steel inventory, the relative error of the national standard definition remains to be discussed. Since late March, steel inventory has declined for 15 consecutive weeks, from 22.51 million tons in March to 16.91 million tons this week, a decrease of 25%. The social inventory of rebar fell from 10.8 million tons to 7.41 million tons this week, a decrease of 32%. The inventory consumption ratio calculated based on the above inventory is similar to that in the same period of previous years. At the same time, the inventory of key iron and steel enterprises of CISA has also decreased. Only from the perspective of inventory cycle, the inventory clearance cycle of steel is approaching. He also knows that China's development cost has increased by only $160, and the steel price is poised to rise

to sum up, after continuous losses of steel mills, the momentum of further decline is not strong, and the market is expected to enter a relatively stable and strong trend

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