Having weathered the coVID-19 epidemic, China’s steel industry has proved with concrete actions that it is the mainstay of China’s national economy and has the strength, capability and strength to become the “stabilizer” and “ballast” for the smooth operation of the national economy.In 2020, Within less than three months apart, General Secretary Xi Jinping paid two visits to steel enterprises for survey and discussion, which reflected the importance the General Secretary attached to the steel industry and the important position of the steel industry in the national economy.

First, China’s steel industry was operating at the peak of the epidemic

The highest industrial industry, strong support of the downstream industry to resume production

From late January to early March, coVID-19 is at its worst.During this period, orderly resumption of work and production is an important measure taken by the CPC Central Committee to effectively respond to the COVID-19 epidemic and ensure stable economic and social operation.The CPC Central Committee and the State Council attach great importance to this and have made several arrangements.Relevant ministries and commissions and local governments have successively issued various incentive policies to fully support and organize various production enterprises to resume work and production.

At one of the most serious epidemic period, the China iron and steel association (hereinafter referred to as the steel association) analysis of domestic and international economic environment and market environment, timely and accurately forecasting the changing trend, on the basis of the operation situation, closely tracking the iron and steel industry chain upstream and downstream industry focus on track to return to work and study the downstream industry production schedule and actual operation situation, as well as to the steel industry supply, the influence of the organic link.Since February 13, cISA has been monitoring the resumption of work and production of steel industry standard enterprises (independent legal persons) announced by the Ministry of Industry and Information Technology on a daily basis.On February 19, the utilization rate of steel production capacity in the monitored steel enterprises was 87% and iron production capacity utilization rate was 90.8%.The operating rate of steel association member enterprises is 96%, among which the long process steel enterprises are in the state of continuous production (operating rate is 100%), but most of the electric furnace enterprises have stopped production.

Meanwhile, the resumption of work and production of major industrial industries and construction industries in the country is also advancing rapidly.For example, from the regional point of view, the best resumption of work in guangdong, Jiangsu, Shanghai and other large economic provinces (cities) above the scale of industrial enterprises resumption rate of about 50%.From the perspective of industry, as of February 19, the resumption rate of construction industry is about 30%, machinery industry about 60%, automotive industry about 75%, shipping industry about 70%, light industry about 50%.As a basic industry in the national economy, the iron and steel industry maintains a higher operating rate than the downstream industry, which plays a strong supporting role in accelerating the resumption of work and production in the downstream industry.

In the most severe period of the epidemic, STEEL Association has always advocated that the whole industry should follow the principle of supply and demand balance to organize production.First, we should organize production according to demand and be on high alert for market risks caused by oversupply.Second, we need to ensure supply. When the total supply of steel is sufficient, we need to prevent structural imbalances that may occur in certain regions, individual products and special periods, and effectively ensure the phased growth of steel demand in the process of the downstream industry’s resumption of work and production.

In general, during the worst period of the epidemic, the steel industry maintained the highest utilization rate among all major industrial sectors and construction industries.From January to February, China’s crude steel output increased by 3.1% year on year.In March, crude steel output fell only 1.7% year on year, and the production level did not show a sharp decline year on year, and maintained a high level of the historical period.At the same time, in the face of the periodic decline in steel demand in the first quarter, steel inventories of steel enterprises were controlled within a bearable range, indicating that it is rational for the steel industry to maintain a high level of production, which is based on the good prospect of China’s economic development in the future.The steel industry maintained a high level of production during the worst period of the epidemic, which not only showed to the domestic and foreign countries that the Chinese economy still had great resilience to the impact of the epidemic, but also transmitted positive and positive energy to the whole society.

Second, China’s rapid economic recovery has driven periodic demand for steel

Record high, steel production and steel demand growth in sync

China’s economic recovery from April has been much faster than expected, with GDP growing at 3.2 per cent in the second quarter from a year earlier, far better than the 2.5 per cent growth forecast widely accepted by market analysts.With the rapid recovery and development of the national economy, China’s crude steel output has stepped into a rapid growth stage.From May to August 2020, the average daily crude steel output in each month reached the highest value in the same period in history, and the average daily crude steel output in these four months ranked among the top 4 in history (see Figure 1).The average daily output of crude steel in August was 3.0595 million tons, which was the highest average daily output of crude steel in a single month in history.

The growth of crude steel output comes from the growth of steel demand.Since March, the cumulative decline of fixed asset investment in China has narrowed month by month. According to calculation, the growth rate of fixed asset investment in each month from April to August showed positive growth, among which the growth rate of investment in July and August was higher than that of the same period in 2019.Steel Association conducted a special study on structural changes of steel used in construction, and found that the proportion of residential completion value in the construction completion value dropped to the lowest since 2012 (see Figure 2), corresponding to an increase in the proportion of non-residential construction value.Residential building is steel reinforcement is given priority to, as well as the non-residential buildings (e.g., workshop, station, sports venues, etc.) steel, housing construction, such as Bridges, tunnels, ports, airports, etc.) steel is usually strip steel, steel, building board pay equal attention to, and these two types of building steel strength significantly higher than the steel housing.Therefore, the cumulative growth rate of fixed asset investment from January to August 2020 decreased by 0.3% compared with the same period in 2019, but the strength of construction steel increased due to the adjustment of construction category.The adjustment of building categories and the improvement of building steel strength not only bring the increase of steel demand, but also bring the change of building steel structure.

The adjustment of construction category leads to the increase of construction intensity, which is highlighted by the sharp increase in the demand for construction machinery and equipment.For example, from January to August, the sales volume of automobile cranes reached 37,300 units, with a year-on-year growth of 22.1%;Sales of rollers reached 13,500 units, up 12.5% year on year;The sales volume of excavators reached 210,500 units, up 28.8% year on year.Sales volume of internal combustion engine for construction machinery reached 620,200 units, up 13.22% year on year.The growth of sales of construction machinery and equipment drives the growth of production of construction machinery and equipment, and synchronously drives the growth of steel used in manufacturing.The steel used in the manufacture of construction machinery and equipment is mainly concentrated in the plate and strip, thus driving the increase of the output of the plate and strip.

The rapid growth of crude steel production has supported the increase of total demand for construction steel and manufacturing steel and the change of demand structure. Meanwhile, the steel inventory of iron and steel enterprises has been in the trend of continuous decline month-on-month since March.Such as the steel association member enterprise in December 2018 to August 2020 months long material stocks, plate strip stocks were analyzed (see figure 3) shows that since March 2020, the long material, the plate strip stock were dropped, including backplane strip August inventories have dropped compared with the same period in 2019, 921700 tons, but long products stocks than the same period in 2019 increased to 1.2295 million tons.At the end of August, the overall steel inventory of member enterprises increased by only 501,000 tons compared with the same period in 2019, which is close to the normal inventory.

The steel demand increase in 2019 mainly focuses on long construction materials. For example, in 2019, the net increase of reinforcement by 37.73 million tons accounts for 35% of the steel output increase.After removing the duplicate material factor, the proportion of steel output increase in 2019 is 48%.In the first eight months of 2020, the increased output of the five types of extra thick plate, thick plate, medium thick and wide steel strip, hot rolled thin and wide steel strip and cold rolled thin and wide steel strip accounted for 52% of the steel increment, and the increased output of reinforcement decreased to 16%.This shows that China’s steel industry with a strong and rich capacity to support the steel demand changes, and strongly support the rapid recovery of China’s economy.