Sustained steel demand stagnating overcapacity will exist for a long time

If you look at the most pressing problems in the Chinese steel industry, it is undoubtedly the issue of excess capacity. Overcapacity is now almost synonymous with the Chinese steel industry.

According to statistics, in 2014, China imported 940 million tons of iron ore, and it is expected that this number will exceed 1 billion tons in the next year. The crude steel production this year will exceed 820 million tons, an increase of 1.67%. According to statistics from relevant departments, China's crude steel production capacity has actually approached 1.2 billion tons.

The sharp contrast with China's crude steel output is the demand for China's steel. According to statistics, China's apparent consumption of crude steel equivalent this year was 737 million tons, a year-on-year decrease of 2.25%.

Obviously, under the severe situation of increasing production and diminishing demand, resolving such huge excess capacity will still be a long-term and arduous task.

How to resolve excess capacity? Some people say that the increase in demand for steel can naturally resolve excess production capacity. However, under the situation that China's economy will shift from high-speed growth to high-speed growth, it seems increasingly remote to reduce production capacity by increasing steel demand.

As the real estate industry of China's large steel consumer, its performance this year seems to have sounded a warning for steel companies. According to statistics, this year, the construction industry ranked first with 390 million tons of consumption on the list of steel demand in various industries. In forecasting steel demand next year, the forecast in the construction industry has only increased by about 5 million tons. The Metallurgical Industry Planning and Research Institute adopts the downstream industry consumption law and predicts that China’s steel demand in 2015 will be 723 million tons, which is 1.47% higher than the 712.4 million tons this year. This is simply not worth mentioning compared to the domestic steel production capacity of nearly 1.2 billion tons.

However, due to the "Belt and Road" policy proposed, many domestic steel companies seem to see the dawn. The data shows that in recent years, China’s engineering contracting projects abroad have been expanding year by year. The output value has increased from US$13.87 billion in 2003 to US$137.14 billion in 2013. In the first half of 2014, the value of newly contracted foreign contracted projects was 81.04 billion U.S. dollars, and the analysis stated that the contracted volume and turnover of foreign contracted projects in 2014 is expected to increase by about 5%. Under the background of serious overcapacity in the domestic steel industry, large-scale investment along the “One Belt and One Road” and long industry chain will inevitably drive demand for steel in multiple industries, and at the same time, it can stimulate steel upstream and downstream industrial chains and encourage the whole industry. steel industry.

However, this is a good thing. For Chinese steel companies that are "thirsty for what they need," they may just be "look for the better." Some industry analysts confided to reporters that the construction of railways included in the infrastructure of the “Belt and Road” infrastructure is indeed very attractive to domestic steel companies, but first of all, these demands cannot be met at such a large base of domestic steel production capacity. The result is an immediate effect, and the domestic steel industry presents a situation that is “more gluttonous”.

Analyst Zhang Lin told reporters that “they are still in the planning stage, the specific projects for infrastructure construction, when these projects can be formally started, and how much steel demand can be pulled are unresolved, especially railways, from planning to formal It may take several years for the construction to start. During this period, many steel companies may have already withdrawn from the steel industry."

In addition, according to data obtained by reporters, the demand for steel for railways in various industries this year is only 5.2 million tons, which is 1.33% of the steel demand for the real estate industry, and the number of steel products for railways forecasted next year is also 520. Ten thousand tons, which is the same as this year.