[Ferro-Alloys.com] 

  Behind China's stable economic growth after the epidemic, China's iron and steel industry has contributed a lot. In 2020, China's crude steel output will be 1.053 billion tons, with a year-on-year growth of 7.7%; the consumption of main steel industries will be strong, with the annual apparent consumption of crude steel reaching 1.025 billion tons. In 2021, stimulated by many expected positive factors, China's crude steel production is still likely to continue to increase, and the apparent consumption of steel will also rise slightly. The overall market is relatively optimistic. However, the trend of five kinds of steel products such as cold rolled plate, hot rolled plate, wire rod, medium and heavy plate and rebar may be differentiated. In addition, it is worth noting that the bullish trend of iron ore prices is difficult to change in the short term. In 2021, the trend may be "high before low".

  China's metallurgical industry strongly supports China's economic growth after the epidemic, but its profit margin is lower than the national average level of industries above designated size

  In 2020, the global economy will stagnate or regress under the influence of the epidemic. China's metallurgical industry, represented by iron and steel industry, has well supported the recovery and development of China's economy after the epidemic. According to the data of the National Bureau of statistics, in 2020, the annual capacity utilization rate of China's ferrous metal smelting and calendering industry will be 78.8%, with a year-on-year decrease of 1.2%; the capacity utilization rate of China's non-ferrous metal smelting and calendering industry will be 78.5%, with a year-on-year decrease of 1.3%. In 2020, ferrous metal smelting and calendering industry and non-ferrous metal smelting and calendering industry respectively rank the third and fourth in the utilization rate of industrial capacity in China, which are higher than the average level of 74.5% of the national industrial capacity utilization rate, and only lower than the oil and gas industry (90.1%) and chemical fiber manufacturing industry (80.5%). From January to November 2020, China's metallurgical industry will achieve a total operating revenue of 120480.2 trillion yuan, accounting for 12.8% of the total operating revenue of Industrial Enterprises above designated size. Among them, the operating revenue of ferrous metal smelting and rolling processing industry was 6866.47 billion yuan, a year-on-year increase of 0.8%; the operating revenue of non-ferrous metal smelting and rolling processing industry was 5181.55 billion yuan, a year-on-year decrease of 4.6%.

  But at the same time, by the end of November 2020, China's metallurgical industry has achieved a total profit of 396.03 billion yuan, with an average profit margin of only 3.3%. Among them, the profit of ferrous metal smelting and rolling industry was 244.73 billion yuan, with an average profit rate of 3.6%; the profit of nonferrous metal smelting and rolling industry was 151.3 billion yuan, with an average profit rate of 2.9%. In the same period, the average profit margin of China's Industrial Enterprises above designated size was 6.1%. Restricted by the high dependence on foreign raw materials, China's metallurgical industry lacks market pricing power and discourse power, resulting in weak profitability and low profit level, which is not in line with China's position as the world's largest metal consumer, especially the iron and steel industry.

  In 2020, China's crude steel output will be 1.053 billion tons and its apparent consumption will be 1.025 billion tons

  According to the data of the National Bureau of statistics, in 2020, China's ferrous metal smelting and calendering industry ranks the third in the whole industry with a cumulative growth rate of 6.7%, which strongly promotes the further recovery of China's economy.

  Under the influence of the development strategy of the national new economic pattern, in 2020, China's cumulative pig iron output reached 887.52 million tons and crude steel output reached 1053 million tons, with a year-on-year growth of 5.4% and 7.7% respectively; in the same period, China's steel output reached 1324.89 million tons, with a year-on-year increase of 12.8%. In December 2020, the ratio of iron to steel in China was 81.3%, which was 0.8% lower than that in November. This shows that under the situation of crazy rise of iron ore price, China's iron and steel enterprises are trying to reduce the use of iron ore by using scrap. However, from January to November, China's cumulative iron steel ratio is still as high as 84.3%. By calculation, the average daily output of crude steel in 2020 is 2.877 million tons.

  China novel coronavirus pandemic, China's total export volume of 53 million 671 thousand tons in 2020, down 16.5% compared with the same period last year, and 20 million 233 thousand tons of imported steel, up 64.4% compared with the same period last year, while imports increased by only 19.8% over the same period last year, indicating that the consumption of overseas steel market under the influence of the new crown pneumonia epidemic is relatively low, and the steel price is lower than that of the domestic market, thus leading to an increase in exports to China. In 2020, China's total net export of steel is 33.438 million tons, equivalent to 27.7 million tons of crude steel. According to this calculation, the apparent consumption of crude steel in China will be about 1025 million tons in 2020. China's China novel coronavirus pneumonia will be the driving force for stimulating apparent consumption of crude steel. If we do not calculate the impact of the new crown pneumonia on the steel consumption end, the peak consumption of crude steel consumption will be around 11 billion tons in 2020, and the corresponding national steel production capacity will be close to 14 billion tons. How to effectively restrain the growth of iron and steel production capacity is a difficult problem that must be solved quickly in front of China's iron and steel industry during the "14th five year plan" period. Otherwise, the achievements of resolving excess iron and steel production capacity during the "13th five year plan" period will come to nothing.

  According to the data of the National Bureau of statistics, in 2020, China's real estate development investment will be 14144.3 billion yuan, a year-on-year increase of 7.0%; the construction area of housing will be 9267.59 million square meters, a year-on-year increase of 3.7%. In terms of infrastructure construction, in 2020, China's infrastructure investment (excluding power, heat, gas and water production and supply industries) will increase by 0.9% year on year, of which the investment in railway transportation industry will decrease by 2.2%, the investment in water conservancy management industry will increase by 4.5%, and the investment in public facilities management industry will decrease by 1.4%. Among other steel consumption industries, automobile manufacturing industry increased by 6.6%, metal products industry increased by 5.2%, general equipment manufacturing industry increased by 5.1%, special equipment manufacturing industry increased by 6.3%, electrical machinery and equipment manufacturing industry increased by 8.9%, and computer, communication and other electronic equipment manufacturing industry increased by 7.7%. On the whole, the downstream steel industry will perform well in 2020, and the huge domestic demand released by the market will strongly support the development of China's steel industry in 2020.

• [Editor:Catherine Ren]