Since the beginning of this year, the steel industry has continued to face a severe situation of weakened market demand, declining steel prices, high raw material prices, and continuously declining economic benefits. Steel companies earnestly implement the proposal put forward at the expanded board meeting at the beginning of the year; Stabilize the market, control production, adjust structure, and ensure profitability” The work policy is to actively carry out internal exploration work, and the entire industry is in a difficult operating situation.

1 Basic situation of steel industry operation in the first quarter

oneSteel production has slightly increased, with a significant slowdown in growth rate, but the daily crude steel production level is showing a monthly upward trend

In the first quarter of this year, the national production of pig iron, crude steel, and steel (including recycled materials) was 165.92 million tons, 174.22 million tons, and 222.46 million tons, respectively, an increase of 2%, 25%, and 6.5% year-on-year. Compared with the crude steel production growth rate of 8.7% in the same period last year, the growth rate has fallen by 6.2 percentage points; According to the calendar days, the average daily crude steel production in the first quarter of the year in China was 1.99 billion tons, equivalent to 699 million tons for the whole year. From a monthly perspective, the daily crude steel production level was 180000 tons in January, 190000 tons in February, and 1986400 tons in March.

twoSteel exports maintain growth, while imports have decreased

In the first quarter of this year, China exported a total of 12.15 million tons of steel, a year-on-year increase of 1.8%. Among them, 5.03 million tons were exported in March, a month on month increase of 1.64 million tons; Accumulated imports of steel amounted to 3.41 million tons, a year-on-year decrease of 18.4%, with 1.27 million tons imported in March, an increase of 30000 tons compared to the previous month; Accumulated imports of steel billets amounted to 110000 tons, a year-on-year decrease of 4.25%. In the first quarter, the net export of crude steel was 9.19 million tons, an increase of 2.67 million tons year-on-year, or 40.95%. The net export increase of 2.67 million tons accounted for 62% of the national crude steel production increase of 4.25 million tons during the same period.

The cumulative import of iron ore in the first quarter was 187.62 million tons, an increase of 6% year-on-year. Among them, imports in March amounted to 62.87 million tons, a decrease of 2.11 million tons compared to the previous month and an increase of five59% year-on-year.

threeSlow growth in market demand，Low volatility of steel prices

The first quarter is in the off-season of steel consumption, coupled with high inventory and pessimistic market expectations from steel trading companies and users, the demand for steel in the market is not strong, and steel prices have been consistently low. According to the statistics of the Iron and Steel Association, as of the end of March, the comprehensive price index of domestic steel was 12one18 points, slightly higher than the end of last year (120.45 points), and decreased by 10.05 points or 7.66% compared to the same period last year (13one23 points).

From the perspective of variety, the prices of long and sheet materials are both at a low level, and the situation of sheet materials is better than that of long materials. At the end of March, the price index of long timber was 12five85 points, a decrease of 0.51% from the end of last year; The price index of sheet metal is 118.82 points, up 218% from the end of the year. But compared with the same period last year, there has been a significant decrease, with a 7.92% decrease in long timber and a 7.32% decrease in sheet metal.

fourThe economic benefits of steel enterprises continue to decline, and the industry is experiencing losses

Since the beginning of this year, the steel industry has continued to face a severe situation of low prices and high costs, leading to a further decline in the economic benefits of steel enterprises. According to statistics from the Iron and Steel Association on key large and medium-sized steel enterprises, the total industrial output value reached 512.2 billion yuan in the first two months of this year, a year-on-year increase of 0.98%; Achieved sales revenue of 546.8 billion yuan, a year-on-year decrease of 46%; Achieved a profit and tax of 7.083 billion yuan, a year-on-year decrease of 76.21%, of which the realized profit was -2.804 billion yuan, shifting from a loss in the main steel production business to an industry loss, and also the first industry wide loss since entering the new century. The loss area reached 4.2%, an increase of 3.2 percentage points year-on-year; The loss amount of the loss making enterprise reached 7.8 billion yuan, an increase of 4 times compared to the same period last year.

fiveThe growth rate of fixed assets investment in ferrous metal smelting and rolling has dropped

In the first quarter of this year, the cumulative investment in fixed assets in the steel industry was 86.1 billion yuan, a year-on-year increase of 10.8%, which was one seven percentage points higher than the same period last year and four seven percentage points lower than the annual growth rate last year. Among them, the investment in black metal mining and beneficiation was 14.8 billion yuan, a year-on-year increase of 26.6%, 7.9 percentage points higher than the same period last year, and 8.2 percentage points higher than the annual growth rate of last year; The investment in black smelting and rolling was 71.3 billion yuan, a year-on-year increase of 8.0%, a decrease of 26 percentage points from the same period last year, and a decrease of 6.6 percentage points from the annual growth rate last year.

2 The current issues that need special attention in the steel industry

oneActual negative growth in apparent consumption of crude steel，Increased uncertainty in the steel market

In the first quarter of this year, the apparent consumption of crude steel in the domestic market was 1650.3 million tons, an increase of 1.58 million tons compared to the same period last year, with a growth rate of only 0.97%. Considering the average daily apparent consumption of 1.849 million tons in February this year, if compared to the same period last year, the actual apparent consumption of crude steel in the first quarter of this year decreased by 270000 tons, a decrease of 0.16%.

This should be highly concerned by enterprises, as the daily production level of crude steel in March was equivalent to an annual production of 725 million tons of crude steel, and it showed a monthly upward trend from January to March. If crude steel production continues to rise, once the international market changes, it will inevitably bring significant pressure to the domestic market. The significant increase in net exports of crude steel in the first quarter has to some extent eased the pressure on the domestic market, and steel companies should have a clear understanding of this.

twoAs the growth rate of fixed assets investment and steel industry has slowed down, the pattern of weakening demand has not changed

In the first quarter of this year, the national fixed assets investment (excluding farmers) grew 20.9% year on year (18.9% in real terms), down 9 percentage points from the growth level of last year. Infrastructure investment (excluding electricity, heat, and water) decreased by 2.1% compared to the same period last year, marking the first year-on-year decline in recent years.

Meanwhile, influenced by the national real estate regulation policies, real estate development investment increased by 2.5% year-on-year from January to March, a decrease of 4.3 percentage points from January to February; The construction area of real estate development enterprises' houses increased by 25% year-on-year from January to March, with a growth rate 10.5 percentage points lower than that of January and February; The newly started construction area of houses increased by 0.3% year-on-year, but the growth rate fell by 4.8 percentage points, with a decrease of 5.2% in the newly started construction area of residential buildings. The completed area of houses increased by 39.3% year-on-year, but the growth rate fell by five percentage points.

This season?, The added value of industrial enterprises above designated size increased by 1.6% year-on-year, a decrease of 1.6 percentage points from December last year. In the main steel industry, the general equipment manufacturing industry, transportation equipment manufacturing industry, electrical machinery and equipment manufacturing industry, electronic equipment manufacturing industry, etc. grew by 8.8%, five 9%, 10.8%, and 11.2% respectively, but the growth rates fell by 13, 8.2, 6.9, and 4.1 percentage points respectively compared to the same period last year.

The whole industry should be soberly aware that due to the decline in the growth rate of fixed assets investment and changes in the investment structure, as well as the decline in the growth rate of the main downstream steel industry, it is difficult for the steel market to have a relatively high growth, the steel output remains at a high level without support, and the pattern of insufficient market demand has not changed.

threeSteel inventory remains high，Control production cannot be relaxed

At the end of March, the social inventory of 26 major steel markets and five types of steel in China was 17.89 million tons, a month on month decrease of 1.05 million tons, a decrease of 55%. Despite a slight decrease in steel inventory at the end of March, steel inventory increased by 4.99 million tons compared to the beginning of the year, with a growth rate of 38.66%, still at a relatively high level. Among them, the social inventory of rebar has increased by 61% compared to the beginning of the year; The wire has increased by 9five28%; Hot rolled coils increased by 9.55%; Cold rolled sheet increases by 20%; The medium thick plate increased by 8.92%. At the end of February, the key statistics showed that the inventory of steel enterprises was 12.64 million tons, slightly lower than the end of January, but still increased by 2.71 million tons or 27.29% compared to the beginning of the year.

The steel industry cannot see the daily production of steel reaching 1.9865 million tons in March, equivalent to an annual output of 725 million tons, and blindly optimistic about the slight rebound in steel prices. The current price rebound is only a temporary achievement of reasonable control of production in the early stage, and is not driven by market demand growth. The supporting effect is weak. If production is released too quickly, it is easy to cause inventory to rise and prices to fall.

fourThe prices of raw materials continue to rise, putting great pressure on enterprises to increase costs

With the successive introduction of reform policies on resources, energy prices, finance and taxation, the prices of raw materials for steel production such as iron ore, coal, and electricity continue to rise, putting high cost pressure on steel enterprises. In 2011, the average increase in steel product costs exceeded 15%. Starting from February 1st this year, the government has raised the resource tax collection rate for iron mines from the original 9 yuan per ton to 12 yuan per ton. This will result in an additional 3 yuan of resource tax per ton of raw ore, affecting the industry by approximately 4 billion yuan; The prices of metallurgical coal, including main coking coal, injection coal, and thermal coal, have been continuously rising in recent years. Even though steel prices have fallen sharply since the fourth quarter of last year, coal prices have remained high; In addition, since last year, the country has raised sales electricity prices twice; The price of imported iron ore has also been at a high level due to the constraints of foreign mining monopolies. Difficulty in raising funds for enterprises, resulting in a significant increase in financial expenses; The wages of enterprise employees have increased, and labor costs are also on the rise; Enterprises increase investment in energy conservation, environmental protection, and other aspects, resulting in increased operating costs. The upward trend of steel production costs is difficult to reverse in the short term, and it is challenging for steel companies to improve their economic efficiency.

3. Surrounding“Stabilize the market, control production, adjust structure, and ensure profitability”The work objective，Actively carry out work

At the China Iron and Steel Industry Council Meeting held at the beginning of the year, we carefully analyzed the severe situation faced by the industry and clearly proposed that accelerating the transformation of the development mode of the steel industry should be the main line of work for the whole year, and that; Stabilize the market, control production, adjust structure, and ensure profitability” As a key work goal for the whole year, the following key tasks have been carried out.

One is to spare no effort in stabilizing the market. In late February, a steel market analysis symposium was held in a timely manner to exchange information on steel sales and carefully analyze future trends. The association also proposed to strengthen industry self-discipline and actively regulate production. A symposium on financial and efficiency analysis was held, actively reducing costs and increasing efficiency, striving to turn losses into profits, and improving the quality and efficiency of the operation of the steel industry. Subsequently, a symposium on coal supply for steel enterprises was held in a timely manner, which clarified that the enterprise should always adhere to the principle of enterprise efficiency as the center in coal procurement, supply, and cost reduction, strengthen procurement management, strictly control coal quality, avoid market risks, establish long-term strategic cooperation relationships, stabilize channels, form complementary industrial chains, and reduce disorderly competition.

The second is to actively carry out activities to learn from advanced enterprises and increase efforts to; Benchmarking and tapping potential; The promotion and publicity efforts of the event actively respond to the difficulties faced by the industry. Last year, the association proposed an activity to learn from Baosteel. At the expanded meeting of the board of directors at the beginning of this year, we promoted the experience of the emerging Jihua Group, which caused a significant response in the industry. By learning from advanced enterprises, everyone can focus on accelerating structural adjustment, product upgrading, expanding the market influence of products, and improving the economic efficiency of enterprises. This work has received response from enterprises, and some have gone out to learn from advanced companies.

On the other hand, further increase the focus on“ Benchmarking and tapping potential; Efforts will be made to promote and publicize the event, striving to achieve; Ensure profitability; Goal& ldquo; Benchmarking and tapping potential; The event has been carried out in the steel industry for more than 10 years and has played an important role in promoting cost reduction for enterprises. Some companies have already; Benchmarking and tapping potential; The indicators are used as internal assessment indicators for the enterprise. Currently, efficiency is the most prominent issue for enterprises and industries in 2012; Ensure profitability; It is the most important goal to strive for. Therefore, in the current difficult period, the production and operation of enterprises, enterprise management, and all work, including financial work, should be centered on efficiency and aimed at profitability. Enterprises need to; Benchmarking and tapping potential; As an important tool for enterprises to ensure profitability, the association will also increase its publicity efforts through media such as China Metallurgical News, truly setting an example for enterprises to learn from and achieve goals.

The third is to actively promote technological progress and innovation, and take promoting product upgrading of enterprises as an important task. The organization has approved the proposal for Baosteel; Development and Industrialization of Manufacturing Technology for Low Temperature and High Magnetic Induction Oriented Silicon Steel& ldquo; Development of ultra fast cooling system for Shougang 4300mm medium thick plate production line and application of new generation TMCP process; Identification of scientific and technological achievements. The association has also officially launched recently; Twelfth Five Year Plan; National Science and Technology Support Program Project; Development and application of refractory materials for energy-saving new technologies in the steel industry& ldquo; Research and Demonstration of Key Technologies for New Generation Energy saving and Efficient Continuous Heat Treatment; project Completed“ Eleventh Five Year Plan; National Science and Technology Support Program; Integration of New Generation Steel Process Engineering Technology; Expert review and acceptance of the project. To strengthen the management of technological innovation, the association will soon introduce three management measures: organizational management of technological projects, evaluation (appraisal) of technological achievements, and promotion of technological achievements? The law.

The fourth is to accelerate the work of China's iron ore spot trading platform. The China Iron Ore Spot Trading Platform, initiated by the China Iron and Steel Industry Association, the China Chamber of Commerce for Import and Export of Minmetals and Chemicals, and the Beijing International Mining Rights Exchange, was launched on January 16, 2012. This platform is committed to fully leveraging the role of market discovery prices, reducing malicious speculation, promoting the formation of a fair, just, and transparent iron ore pricing mechanism, and promoting the healthy, orderly, and stable development of the iron ore market. Adhere to the principle of spot trading, only engage in related business of iron ore spot trading, and do not develop futures, swaps, and other financial derivative businesses; Adhere to the principle of openness and welcome domestic and foreign steel producers, iron ore producers, and traders to join and cooperate.

At present, mining companies such as Rio Tinto, VALE, FMG, steel companies such as Baosteel, Ansteel, Shougang, and Wugang, as well as trading companies such as China Steel and Minmetals, have joined the platform and completed the preliminary work of rule formulation review, software development and debugging, and member signing. On March 29th, nearly a hundred domestic and foreign enterprises participated in the platform testing, and it is currently running smoothly. It is planned to go online in May.