China's strong market demand has absorbed excess international steel production

The China Iron and Steel Industry Association held a third quarter information conference to conduct a systematic analysis of the operational situation of the steel industry in the first three quarters of 2020. From the information disclosed at the meeting, it is not difficult to see that in the face of the huge impact of the COVID-19 and the complex and severe domestic and international environment, China's steel industry has maintained a steady growth in production, a slight rebound in prices, and gradually improved its efficiency. It has achieved healthy and stable development, which not only supports the rapid recovery of China's economy, but also shares the prosperity of China's steel market with the world.

In accelerating the construction of a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other, we need to fully understand the role of Chinese steel in China's economic recovery and clarify the contribution of Chinese steel to the world's steel development. This will lay the foundation for achieving higher quality development by clearing obstacles.

Firstly, the rapid recovery of the Chinese economy has brought enormous market space for Chinese steel, driving an increase in Chinese steel production. Chinese steel has also played a role as a "ballast stone" and "stabilizer" in supporting the strong recovery of the national economy.

According to data from the National Bureau of Statistics, China's GDP in the second quarter increased by 3.2% year-on-year and 11.5% month on month, making it the only major economy in the world to achieve positive growth. China's GDP grew by 0.7% year-on-year in the first three quarters, successfully transitioning from negative to positive. On October 13th, the International Monetary Fund (IMF) released its World Economic Outlook report, which predicts that the global economy will shrink by 4.4% in 2020; The Chinese economy will grow by 1.9%, becoming the only major economy in the world to achieve positive growth.

Thanks to this, China's steel production has been increasing month by month in the favorable situation of continuously releasing domestic demand. In the first nine months of this year, China's crude steel production reached 782 million tons, a year-on-year increase of 4.5%, but the apparent consumption of crude steel increased by 8.94% year-on-year. At that time, the global crude steel production reached 1.347 billion tons, a year-on-year decrease of 3.2%. China's crude steel production accounts for 58.1% of the world's total. It can be said that Chinese steel, which occupies half of the world's steel market, not only did not suffer from the impact of the global economic recession, but also relied on a strong domestic market to achieve a dynamic balance of supply and demand in stages. We must admit that the growth of China's steel production is entirely the result of the demand driven by the Chinese market. From the current steel inventory that has recovered to a reasonable level, this viewpoint can also be confirmed.

Secondly, Chinese steel has made significant contributions to the recovery and development of world steel.

One is that Chinese steel provides huge market space for steel products from other countries. In the first nine months of this year, China's steel exports decreased by 19.6% year-on-year, imports increased by 72.2% year-on-year, and steel billet imports increased by nearly 10 times year-on-year; Starting from June, crude steel net imports have been showing a trend for four consecutive months. This is the second time since the 2009 financial crisis that China's steel industry has experienced a net import of crude steel. In fact, the increase in China's steel consumption intensity is entirely dependent on the domestic circulation, which is fully digested within China. Dalian Stainless Steel Dalian Special Steel Products Dalian Steel Products not only did not bring consumption pressure to the global steel market, but also shared the prosperity of the Chinese market with the world, absorbed steel products produced by other countries, and provided huge market space for other countries. This is not only a manifestation of China's economic resilience, but also a manifestation of China's opening up of the steel market to the outside world, and has made China's contribution to the recovery of the world steel industry under the influence of the epidemic.

Secondly, China's steel industry has effectively resolved overcapacity, driving the recovery of the global steel industry. From 2016 to 2018, China Steel has cumulatively reduced its crude steel production capacity by over 150 million tons and banned 140 million tons of "ground bar steel". Excessive steel production capacity is a global problem. It has been proven that the reduction in China's crude steel production capacity far exceeds that of other countries in the world, and even exceeds the cumulative decrease in global crude steel production capacity. The achievements made during this period not only benefited Chinese steel enterprises, but also effectively drove the development of the world steel industry and the recovery of the world economy, and were recognized by the global steel industry. At present, Chinese steel is undergoing the world's most transparent capacity replacement. Dalian Stainless Steel Dalian Special Steel Products Dalian Steel Products In this world's largest capacity update plan, China is implementing strict measures such as reducing and replacing steel production capacity and conducting online publicity to strictly control new production capacity. According to statistics, nearly 300 million tons of production capacity will be reduced and updated within 5 years. On October 22nd, the Ministry of Industry and Information Technology announced that it plans to increase the replacement ratio of environmentally sensitive areas from no less than 1.25:1 to 1.5:1. The specific reduction and replacement ratio for non environmentally sensitive areas is 1.25:1, further increasing efforts to reduce production capacity through capacity replacement. It can be said that China's efforts and determination to resolve overcapacity in steel are among the best in the world, and the results are evident to all.

Finally, Chinese steel will have more potential during the 14th Five Year Plan period.

Currently, the global economic situation and the recovery of steel production are not balanced, and Chinese steel also faces many challenges and opportunities. It should be noted that Chinese steel has always been primarily focused on meeting domestic demand. Recently, the Chinese government has made it clear that it will accelerate the formation of a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other, taking meeting domestic demand as the starting point and foothold of development. This will undoubtedly promote China's steel production to continue to focus on meeting domestic demand in the coming years. At the same time, in the face of the new requirements brought about by the construction of a new development pattern, China Steel will maintain its goals, efforts, and confidence in deepening supply side structural reform, consolidating the achievements of capacity reduction, and promoting higher quality development.

The 13th Five Year Plan is coming to an end, and the 14th Five Year Plan is about to begin. China Steel will focus on the fundamental task of comprehensively improving the industrial foundation and industrial chain level, adhere to the two major development themes of green development and intelligent manufacturing, focus on solving the three major pain points of controlling capacity expansion, promoting industry concentration, and ensuring resource security, and continue to promote the internationalization process; Grasp the strategic starting point of expanding domestic demand and better layout and promote high-quality development.

We have reason to believe that through continuous efforts to carry forward the past and open up the future, China's steel industry will not only become a backbone force in smoothing the national economy and building a new development pattern, but also contribute to the sustained prosperity of the world's steel industry, achieving more efficient, fair, sustainable, safer, and greener high-quality development.

Related News

< 123 >