Steel market is proceeding stably

In 2020, China achieved major strategic achievements in the fight against COVID-19. In the second quarter of that year, China’s economy began to recover rapidly and gradually returned to its pre-pandemic growth rate. In particular, infrastructure investment significantly increased China’s consumption of Gi square steel pipe. In that year, China’s crude steel production reached 1.065 billion tons, an increase of 7 percent year-on-year. In the same period, Chinese steel social stock does not increase, still remains at the lower level. After the carbon emission control target was put on the agenda, the relevant departments further put forward the task of output control from the perspective of environmental protection and climate reduction targets.

The reduction of output should be considered in accordance with the demand. We believe that to judge whether steel production is reasonable, we should consider the overall demand, imports and exports, steel stocks and carbon emissions in a comprehensive and balanced manner. It must be admitted that the domestic rectangular steel pipe consumption is on the rise, which is inseparable from the downstream industry to pull the demand, especially after the epidemic. The country has taken multiple measures to vigorously promote the resumption of work and production. Downstream industry ushered in a new round of development opportunities, and downstream demand is relatively strong. In the case of demand growth, appropriate and coordinated increase in output is reasonable, the market only to maintain a balance between supply and demand, steel prices can tend to be stable.

It is necessary to coordinate and balance the environmental protection indicators and production indicators. At present, the steel export tax rebate policy has been cancelled, which is more required to maintain the balance between supply and demand of zinc coated steel pipe in the market, which is also the premise of reducing crude steel output. The state has repeatedly emphasized supply and price stability, and the central government has also rectified the movement of “carbon reduction”, which shows the importance of the balance between supply and demand for the stable operation of the market, but also shows the necessity of the “double control” policy of production capacity and output.

It should be pointed out in particular that under the guidance of profits, some steel pipe companies have underreported capacity or even output, which has seriously compromised the implementation effect of the “dual control” policy. How to prevent it? Not long ago, the relevant person said that enterprises that meet the environmental protection standards cannot reduce production, while strengthening efforts to clean up polluting enterprises and control new production capacity, emphasizing that in order to achieve the “double carbon” goal, enterprises should continue to maintain the pressure to reduce production on the basis of maintaining supply and price stability. The author thinks, this is also advantageous to iron and steel enterprise to maintain certain profit.