China's steel production in 1996 over one hundred million tons mark for the first time, ranking first in the world. Since then, China's steel production growth year after year and ranked first in the world. As oil is the blood of the industry, iron and steel skeleton of the industry, the rapid development of China's steel industry has achieved a lot for the rapid advance of China's industrialization.
But in the world economy is rebalancing the context of China's main problem is excess capacity, excess iron and steel industry has been especially pronounced. 2008 with an annual output of 500 million tons iron and steel, but after that Chinese steel production has not only a reasonable reduction, but continue to increase and record highs.
In October 2008, the domestic large and medium-sized steel enterprises losses reached 5.835 billion yuan, losses expanded to 29.122 billion yuan in December, the situation of the industry losses have been maintained until April 2009, seven consecutive monthly loss. 2011 crude steel production over 700 million tons, an increase of 40% compared to 2008. One theory is that: China's iron and steel annual production is only 1.49 billion tons of world steel production, global production of nearly half - 2011 total crude steel production than the rank of 2 to 17 countries / regions of the world crude steel production more than 4.159 million tons. At the same time, consumption growth is lower than output growth, import and export increase with age but the total exports has
remained relatively low level.
Once the 4 trillion economic stimulus to the domestic steel industry has missed the time necessary for the industry reshuffle, on the contrary continue to go crazy. This failure to continue to enlarge the overseas iron ore "appetite eat prospective Chinese", also makes the more prominent industrial bottlenecks. August 2008 imports of iron ore reached 154.46 U.S. dollars / ton, was the feeling is the price; 2008 subprime crisis, the iron ore price was collapsing with the general trend, but in September 2011 reached a staggering $ 175.92 / t! all of this, has already decided the steel industry has been delayed adjustment to more violent, which is currently the upstream and downstream steel industry is suffering from painful experience lies at the root.
In fact, China is long overdue initiative to reduce capacity, increase China's iron ore negotiations and pricing initiative, but unfortunately, the fragmented nature of the domestic steel producers did not show due vigor. From the point of view of economic laws, the steel production industry, from the brilliant performance, profitability, modest to comprehensive loss, just a matter of time before the inevitable result. This is the ultimate proof that industrial restructuring to achieve decisive force, not an administrative slogan, nor is it in government hands, but the hand of the market.
The steel trade enterprises are in the middle reaches of the general trend of shrinking profit margins, the inevitable need for timely conversion of business ideas and practices. For example, take the initiative to reduce inventory and speed up the turnover efficiency. More important, there are two things: First, pay close attention to macroeconomic policies, to adjust their business strategy according to the economic cycle; innovative risk management tools to take full advantage of the information and store of value of the futures market. Where do better in these two areas of enterprise, the general will smooth response to the adverse impact of the industry, but also lay a good foundation for the next transition.
Overlay under the influence of more than two years of macro-control and foreign sovereign debt crisis, in November last year, the profits of steel prices dropped significantly, the total profit of large and medium-sized steel enterprises fell from 7.899 billion yuan to 1.375 billion yuan, a decline of 82.6%. In January and February this year, profits were a loss of 2.321 billion yuan and a loss of 548 million yuan. After industry profits rebound, but in June the situation continues to deteriorate. Shrewd steel trade to the inventory in a timely manner to avoid a loss, and also a lot of profit through the futures market short case.
Looking ahead, the major economies of Europe and the United States and Japan may fall into the long-term downturn in growth of the euro area do not even rule out the possibility of a deep recession, this is a severe test on the Chinese economy, the medium term, China's economy may enter the lower growth rate on behalf of the Asian growth stage. Central real estate control policy is still not easily decompression or canceled, while steel consumption in the construction industry accounted for more than 1/3, which means that the long-term needs of the steel it is difficult to Zouwang; part of the city began to implement a vehicle restriction policy, which negative impact on the already bleak steel industry is obvious. It is understood that the current round of steel prices, iron and steel enterprises in the fourth quarter of last year there have been large-scale production, but the 2012, capacity utilization rose to 85% but never 80%, the 2008 stock market crash later, once the iron and steel enterprises capacity utilization dropped to less than 70%. Part of the iron and steel industry experts remain negative rebar prices to 3600 first-line, is not overly pessimistic, of course, need further observation.
World iron ore prices have recently declined, and record the out by the end of the lowest level since, but its price is still high above can be described - in May 2012 down to $ 141.16 / ton. The end of June for $ 134 / t. At the same time, international commodity currency exchange rate remained relatively strong. This shows that foreign mining companies on China's entry into the slow growth period is expected to still fuzzy, illusions, and to think that China will have a massive economic stimulus plan.
Author's opinion, these fantasies do not burst, and the bear market is not the end. With the end of the Chinese property market "blip" of warmer, expand production in the first half of the Chinese steel mills will be forced to re-adjust production capacity, the price of iron ore and steel prices will gain another victory. This judgment and I believe that China's economy will have a complement of logical views continue to dip in the third quarter.
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