The steel industry is about to enter a period of steady growth

Zhang Changfu, vice president of the China Iron and Steel Association, said at the 2013 International Conference on Metallurgy and Mineral Products that: "In the future, China's steel market can no longer maintain a growth rate of over 10% as it has in the past, and it is unlikely that there will be significant quantitative growth. Growth, the steel market will appear a rational return. According to forecast, in the coming period, high production, high costs, low prices will become the normal operation of the steel industry. Among them, steel production growth rate may remain at about 2% to 3%, crude steel production will remain at a level of 700 million to 800 million tons for a longer period of time; steel prices will rise to a certain extent, but it is difficult to rebound sharply, and iron ore The stone market will also remain generally loose, and the reason for the rise in ore prices can no longer be found.

Zhang Ping, the former director of the National Development and Reform Commission, who created the greatest potential for urbanization, said during this year's scrutiny that the investment required for urbanization will be the main driving force for China's economic growth in the coming years and the greatest potential for domestic demand. In 2012, the urbanization rate in China reached 52.6% and is expected to further increase to 53.37% this year.

According to Zhang Changfu, the rapid growth of the Chinese steel industry over the past 20 years is due to urbanization and industrialization. From the perspective of future development, the new type of urbanization and industrialization put forward by the Central Government will become a new engine for China’s economic development.

At present, the urbanization rate in developed countries is generally 80%, the developing countries are generally 60%, the world average is 52%, and the recent 2012 development rate of urbanization announced by the NDRC is 52.6%. The latest report from the United Nations on the prospect of urbanization in the world points out that from now until 2030, China’s urbanization will maintain a rapid growth rate, which will increase to 65% to 70%. At present, it is necessary to transfer more than 10 million urban residents every year. It is equivalent to the total population of a medium-sized European country. In the future, China will also increase its population by about 300 million people, equivalent to the current population of the United States. This is unprecedented in the history of world development.

Some experts predict that in the next 10 years, China will add about 400 million urban populations and calculate the fixed-asset investment of 100,000 yuan per capita for peasant workers. This will increase the investment demand by 40 trillion yuan, which is equivalent to an annual increase. 4 trillion yuan in investment. In 2013, investment in the central budget was mainly invested in areas such as affordable housing, urban infrastructure, and infrastructure in underdeveloped areas. It is estimated that the annual investment growth will exceed 24% in 2012, and may reach about 24%, which is an increase of 4 percentage points from the previous year.

In addition, investment in urban rail and railway construction will also provide ample space for the domestic steel market. According to the "2012-2013 China Urban Rail Transit Development Report", in 2012 there were 35 cities across the country that were building rail transit lines and completed a total investment of 260 billion yuan. It is estimated that this investment will reach 280 billion to 290 billion yuan in 2013. . This year, China’s railway investment will reach 650 billion yuan, including 520 billion yuan for capital construction, 5,200 kilometers for investment in new lines, and railway investment will hit a new high in nearly three years.

Downstream “user” moderate growth In addition to infrastructure construction, real estate, machinery manufacturing, automobiles, ships and containers, household appliances and other industries are also major users of the steel industry. The cooling and heating of these industries will undoubtedly determine the domestic steel market outlook.

Zhang Changfu said that the demand for steel products in the downstream industry will grow moderately this year. Among them, the railway, urban infrastructure and rail transit, machinery manufacturing, and automotive industries have a relatively good growth. The real estate and household appliances industries have grown steadily, while the shipping and container industries have continued to slump.

From the perspective of the real estate industry, although the country recently announced the implementation details of the State’s five regulations, it has had a certain impact on the real estate market. However, with the implementation of the new urbanization of the country, this year the state has arranged for 6.3 million new housing units to be built and completed. Ten million sets, this provides guarantee for the steady development of the real estate market this year and in the future. It is expected that the real estate market investment growth rate will remain flat or slightly increase compared with 16.2% in 2012. Analysts believe that the growth rate of real estate investment in 2013 may be 17% to 18%.

The machinery manufacturing industry is also worth the wait. In 2012, the total industrial output value of the machinery industry was 18.41 trillion yuan, an increase of 12.64% year-on-year; the sales value of sales completed was 18.06 trillion yuan, a year-on-year increase of 15.54%. According to the prediction of China Machinery Industry Federation, the market demand for machinery industry products in 2013 will rise moderately over the previous year and grow steadily. The growth rate of total industrial output value and sales output is expected to reach 12%, and the profit and export growth will be around 8%. Last year, the production and sales of China's auto industry reached 19,271,800 and 19,300,000 vehicles, respectively, an increase of 4.6% and 4.3% year-on-year respectively. The auto industry's production and sales exceeded 19 million vehicles, and reached a record high. According to the prediction of the China Association of Automobile Manufacturers, the demand for the automotive market in China in 2013 was 20.8 million, with a growth rate of about 7%.

Due to the economic and trade situation in the world and the sluggish shipping market, the shipping and container industries were in a depressed state last year. In 2012, the nationwide shipbuilding capacity was 60.21 million dwt, a year-on-year decrease of 21.4%; the number of orders for new vessels was 20.41 million dwt, a year-on-year decrease of 43.6%; by the end of December last year, the number of handheld ship orders was 10,695 million dwt, a year-on-year decrease of 28.7%. . It is predicted that the global shipping market may be expected to improve slightly this year compared with 2012. However, due to the drop in hand-held orders, low completion of ship prices, and rising production costs, the major economic indicators of the shipbuilding industry will continue to decline. The ship will be completed in the entire year of approximately 55 million. DWT, the number of new orders may increase slightly, but the amount of hand-held orders will drop below 100 million dwt.

With the expiry of the home appliances to the countryside policy, this year will be the adjustment of the home appliance industry. The Ministry of Commerce stated that this year the country will launch a new policy of encouraging consumer electronics consumption from energy-saving and emission-reduction aspects. The growth rate of the home appliance industry will continue to be around 10%, and the export growth will be about 10%.

Zhang Changfu pointed out in particular that at present, China has gradually shifted from an investment-oriented and export-oriented economy to a consumption-based economic development model. The intensity of the national economy's demand for steel products continues to decrease. Starting from 2011, China’s steel consumption intensity per one billion yuan of GDP has been reduced from 1657 tons to 1370 tons, a decrease of 287 tons/yuan. At present, with the development, promotion and application of high-strength steel, the reduction trend in the use of steel is increasingly evident.

"The reason why the mine price did not rise"

The low prices of domestic steel prices, the sharp increase in global iron ore supply, and the increase in the supply capacity of domestic mines, and many other factors are intertwined. This year's iron ore prices can no longer be found to continue to rise.

Zhang Changfu stated that in the future, the supply and demand relations in the global iron ore market will tend to balance, and ore prices will enter a downward channel. As in 2011 and 2012, the factors supporting high price levels no longer exist, and the ore price will be in a downtrend channel. On the other hand, the demand for the steel market has weakened and the growth rate of steel production has slowed down. Especially in the case of excess domestic steel production capacity, the steel market is fiercely competitive, and steel prices are still at a low price level. Under the effect of cost transmission, ore prices cannot be operated for a long period of time.

On the other hand, the global production and supply of ores have been greatly improved. Driven by high ore prices in the past few years, international mining companies have invested heavily in mine construction. These new investment-building mines will gradually release production capacity, and ore will gradually shift from the original seller’s market to the buyer’s market. It is predicted that in 2013, a total of approximately 50 million tons of new international mines will be added, of which Rio Tinto will increase production by 15 million tons, BHP Billiton will increase production by 10 million tons, and FMG will increase output by 25 million tons. In addition, other countries in the world will also increase certain iron prices. The supply of ore, Australia increased production by 5 million to 10 million tons, Canada increased production by 5 to 8 million tons, and Peru increased production by about 1 million tons. It is estimated that in 2013, the increase of global mining companies will be between 60 million and 70 million tons. The production rate of iron ore is obviously higher than that of steel production, and the supply and demand of international iron ore has changed significantly.

It is worth mentioning that China's domestic iron ore supply capacity is also continuously increasing. With the acceleration of the pace of “going out”, the rights and interests of enterprises in our country have increased by more than 20 million tons. Among them, Shansteel increased 5 million tons, CITIC Pacific increased 5 million tons, and Wuhan Steel increased 7 million tons. At the same time, domestic iron ore production increased significantly, reaching 1.31 billion tons in 2012, an increase of 71.1% over 2008. If mine prices remain relatively reasonable, domestic mine production will continue to increase.

All indications indicate that the price of iron ore does not continue to increase. International well-known analysts such as PricewaterhouseCoopers and Morgan Stanley predict that the international iron ore price will be in the range of 120 to 130 US dollars per ton in 2013. Even world mining companies such as FMG and Vale have expressed that iron ore prices in 2013 At around $120/ton.

In the current light of the overall supply of iron ore is generally relaxed, Zhang Changfu suggested that steel companies should carefully analyze the supply and demand situation in the iron ore market, grasp the pace of procurement, maintain a reasonable inventory, and do not follow the trend blindly.

At the same time, the state must also strengthen supervision of the iron ore market, prevent artificial speculation and manipulate prices, continue to strengthen anti-monopoly efforts, strive to establish a healthy and orderly international iron ore market order, and form an open, fair, and transparent price formation mechanism.