The output of crude steel is reduced

From late April to early May this year, domestic cold rolled steel pipe price rose rapidly. Steel prices continue to rise lack of support, the current round of steel high prices is coming. On May 13, steel prices peaked and began a sharp correction, but they are still high and volatile. Investigate its reason, the global monetary easing, economic recovery this year are the significantly and rapidly important factors. With the gradual narrowing of the global supply and demand gap, overseas inventory is nearing an end, domestic infrastructure and real estate investment growth is slowing down, the second half of the domestic steel demand of hot rolled steel pipe or will decline, the implementation of crude steel production reduction on the domestic steel market supply and demand is generally controllable.

(1) in the second half of the domestic steel demand growth will fall significantly, or negative growth. Since the beginning of this year, the growth rate of investment in real estate development has been falling from 38.3% at the beginning of the year to 15.0% in the first six months of this year. In his speech on July 22, leaders of The State Council once again stressed that houses are for living in, not speculation, and that real estate should not be used as a means of short-term economic stimulus. Relevant ministries and commissions immediately issued relevant documents, clearly insisting that the real estate will not be used as a means of short-term economic stimulus. On August 10, the Ministry of Housing and Urban-Rural Development issued a Notice on Preventing large-scale demolition and Large-scale Construction in the Implementation of urban Renewal Actions (Draft for public Comments), which made it clear that urban renewal actions should be carried out, and both “stay for renovation and demolition” should be implemented, focusing on retention, utilization and promotion, and large-scale demolition and large-scale construction should be strictly controlled. It can be predicted that the real estate and infrastructure investment, which accounts for the main body of steel consumption, will further slowdown, and the growth rate of downstream round steel pipe demand generally shows a relatively large decline.

(2) The absolute quantity of crude steel is limited, and the import and export policies are adjusted to guide the preferential supply of square steel pipe to the domestic market. In 2020, China’s crude steel production reached 1.065 billion tons, with basic balance between supply and demand. According to the calculation of the 26 million tons of pressure reduction, the proportion of the reduction is less than 3%, which means the absolute reduction is limited. The impact on the market is more reflected in expectations. On the other hand, since May of this year, the country has made two successive large-scale adjustments to steel export tax rate, at present, all Chinese steel export tax rebates have been cancelled completely.