China's iron and steel enterprises "limited production and price protection" is difficult to curb the market decline
“Even if the Anzhu Iron and Steel Group, which has not lost through Angang Steel, has begun to lose money, 13 of the 15 production lines in the plant are in deficit.†An iron and steel an agent was at the 2008 China Steel Market Forum held in Hebei recently. Say.
This is just a microcosm of the pressure that steel companies face on the issue of “insufficient demand and falling pricesâ€. The reporter learned that following the introduction of a 20% reduction in output by major steel mills in the beginning of the month, Hebei Iron and Steel Group decided to implement a minimum sales limit in mid-July, while continuing to reduce production by 10%. In the face of limited production and insurance prices for steel companies, industry experts have said that in order to fundamentally reverse the market decline, industrial upgrading should be promoted as soon as possible to increase the added value of products.
"Limiting production" at the same time push "limit price"
Affected by the expected weaker demand in the next phase, some large domestic steel companies have formulated plans to reduce production. Some small and medium-sized private enterprises have even stopped production. According to industry sources, several steel mills in the north such as Shougang, Shandong Iron and Steel Group, and Hebei Iron & Steel Group jointly held a meeting earlier this month to deliberately reduce production by 20% to ease market supply pressure. “This plan for production cuts will be implemented from October. Some steel mills in the south are expected to follow suit,†the person in charge of a steel company in Shandong told reporters. “In addition to limiting production, steel mills have begun to clear inventory and reduce iron ore. The amount of purchases is based on the consumption of the original ore."
In the following week, Hebei Iron and Steel Group once again announced that it would cut production by 10% on the original basis, and studied and decided to implement the “price limit†policy on October 15 at the senior meeting of Hebei Steel Group leaders. According to relevant sources, the so-called "price limit policy" is first of all to set a minimum sales limit, in October the construction steel high line is not less than 3,300 yuan, and the second-level big rebar is not less than 3,700 yuan. Below this price, the steel mills will no longer give distributors any form of subsidies. Secondly, starting from November, the implementation of the new agency sales model will break the previous buyout-style steel trade marketing methods and facilitate market price stability. “This time, the attitude of the steel mills is relatively tough. We must resolutely implement the sales price for October. If the business is selling below this price, it is the responsibility of the merchants themselves. The steel mills will not introduce any new policy on prices in October.†An industry source told reporters.
"In order to withdraw funds, steel mills are selling steel at a lower price. It was previously impossible to buy steel from a trust relationship. Now there is no demand for a trust relationship." Lao Zhang, a trading company, reluctantly told reporters that due to the wrong estimate of the market after the Olympic Games, Many traders have stockpiled a large amount of steel in the surrounding areas of Beijing. The continued decline in prices has put many traders under greater pressure on funds and businesses are in jeopardy. "For the limited production price limit message, it will certainly have a little effect on raising the price, but I don't know how long it will last. I may be able to rise for the first three days and then fall even lower." .
Whether price limit insurement works This reporter learned that after the Hebei Iron and Steel Group's measures were introduced, it will play a positive role in the stability of the construction steel market in North China, and it will be positively responded to by a large number of distributors. After the measures are introduced, the large market in Beijing will cooperate. The policy of the steel mills will increase the market price and the price will basically be above the minimum selling price of steel mills. “The Beijing-Tianjin construction steel market has always been the 'leader' of the domestic market. As the price of the Beijing-Tianjin market stabilizes and signs of a slight increase, it will exert a positive influence on the domestic market and promote the slowdown of decline in other domestic markets. Opportunities for a stable rebound have emerged, said Ma Li, manager of consulting at Lange Steel Research Center.
At the same time, the horsepower also worried that "Hebei Iron and Steel Group is the main force of the Beijing-Tianjin steel market, this limited production measures will have a positive effect on the stability of the Beijing-Tianjin region market, but the decisive role is still the market demand. In addition, the stability of the national steel The price also needs the cooperation of other major steel companies."
He believes that reducing production insured has a certain effect on restraining the market from further decline, but it is likely to be a temporary solution. "At present, the average national steel production rate is as low as 75%. Steel prices have fallen so badly that many companies have suffered losses. It is not so much as limiting production prices.
"The sharp decline in the domestic steel market earlier, in addition to dealer panic, there is a clear problem with the original steel pricing methods." Zhang Shibao, senior steel analyst at China Merchants Securities, told reporters, "The market price fell, steel mills The settlement price follows the downward adjustment and the market price and the steel factory price affect each other, making it difficult for the price to stop falling."
Zhang Shibao believes that the effect of limiting production insured prices is still very hard to say, because the current total steel production capacity has grown significantly from two years ago. In the case of oversupply, the cornerstone of this alliance is not solid, as long as it is partially The prices are slightly adjusted back, and some companies will certainly increase their production capacity immediately. The alliance will not break.
The strategy of integration and growth to solve the problem is due to the current decline in downstream production of machinery, home appliances, automobiles, and real estate, and the issue of oversupply in the steel market has become increasingly prominent. Lang Gang, a senior researcher at the Lange Steel Research Center, told reporters: “The demand from the real estate industry accounts for about 25% of the steel consumption. This part of the market is stagnant, which means that one quarter of the production capacity is not exported.†This reporter learned that this year from 1 to 8 During the month, the country’s total automobile production increased by 14.9% year-on-year, nearly 10 percentage points lower than the same period of last year, of which output fell by 3.3% year-on-year in August, and the first negative growth in years occurred.
Li Zhangjun, sales staff of a steel trading company in Beijing, said: “October steel prices, especially real estate materials, fell by 100 to 200 yuan/ton per day, and the prices of color-coated and galvanized steel fell by 500 to 600 yuan/year before the end of the decade. T. At the same time, the inventory of each steel plant has also increased significantly."
Statistics show that from January to September this year, the sales revenue of iron and steel enterprises was 2098.2 billion yuan, a year-on-year increase of 39.0%, and a profit of 132.6 billion yuan. However, in September, the loss was 1.15 billion yuan, and the loss was 32.4%. "Now steel prices and costs are not loss-free, but whoever produces them," said Xu Zhongbo, a professor at Beijing University of Science and Technology.
Li Xinchuang, deputy director of the China Metallurgical Industry Planning and Research Institute, believes that such measures of forced production cuts have exposed the ills of Chinese steel companies being led by the market. In this regard, steel companies should spend more time on industrial upgrading before they can gain market initiative.
Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association, said in an interview with reporters that “the global economy is weak and domestic inflation pressures continue. This determines that the steel industry will not be able to emerge from the downturn in a short period of time. In such a severe environment, it is inevitable. It is a process of industry restructuring and scouring.†He suggested that steel companies should change their business concepts and develop high-end products, and at the same time vigorously develop the modern logistics industry represented by deep processing of steel products to further reduce raw material fuel and production logistics costs. Increase the added value and utilization of steel. In addition, we must vigorously promote the construction of the futures market for steel products and raw materials, increase our country's pricing power for steel and iron and steel raw materials, and accelerate the construction of domestic and overseas iron and steel original fuel bases.
This is just a microcosm of the pressure that steel companies face on the issue of “insufficient demand and falling pricesâ€. The reporter learned that following the introduction of a 20% reduction in output by major steel mills in the beginning of the month, Hebei Iron and Steel Group decided to implement a minimum sales limit in mid-July, while continuing to reduce production by 10%. In the face of limited production and insurance prices for steel companies, industry experts have said that in order to fundamentally reverse the market decline, industrial upgrading should be promoted as soon as possible to increase the added value of products.
"Limiting production" at the same time push "limit price"
Affected by the expected weaker demand in the next phase, some large domestic steel companies have formulated plans to reduce production. Some small and medium-sized private enterprises have even stopped production. According to industry sources, several steel mills in the north such as Shougang, Shandong Iron and Steel Group, and Hebei Iron & Steel Group jointly held a meeting earlier this month to deliberately reduce production by 20% to ease market supply pressure. “This plan for production cuts will be implemented from October. Some steel mills in the south are expected to follow suit,†the person in charge of a steel company in Shandong told reporters. “In addition to limiting production, steel mills have begun to clear inventory and reduce iron ore. The amount of purchases is based on the consumption of the original ore."
In the following week, Hebei Iron and Steel Group once again announced that it would cut production by 10% on the original basis, and studied and decided to implement the “price limit†policy on October 15 at the senior meeting of Hebei Steel Group leaders. According to relevant sources, the so-called "price limit policy" is first of all to set a minimum sales limit, in October the construction steel high line is not less than 3,300 yuan, and the second-level big rebar is not less than 3,700 yuan. Below this price, the steel mills will no longer give distributors any form of subsidies. Secondly, starting from November, the implementation of the new agency sales model will break the previous buyout-style steel trade marketing methods and facilitate market price stability. “This time, the attitude of the steel mills is relatively tough. We must resolutely implement the sales price for October. If the business is selling below this price, it is the responsibility of the merchants themselves. The steel mills will not introduce any new policy on prices in October.†An industry source told reporters.
"In order to withdraw funds, steel mills are selling steel at a lower price. It was previously impossible to buy steel from a trust relationship. Now there is no demand for a trust relationship." Lao Zhang, a trading company, reluctantly told reporters that due to the wrong estimate of the market after the Olympic Games, Many traders have stockpiled a large amount of steel in the surrounding areas of Beijing. The continued decline in prices has put many traders under greater pressure on funds and businesses are in jeopardy. "For the limited production price limit message, it will certainly have a little effect on raising the price, but I don't know how long it will last. I may be able to rise for the first three days and then fall even lower." .
Whether price limit insurement works This reporter learned that after the Hebei Iron and Steel Group's measures were introduced, it will play a positive role in the stability of the construction steel market in North China, and it will be positively responded to by a large number of distributors. After the measures are introduced, the large market in Beijing will cooperate. The policy of the steel mills will increase the market price and the price will basically be above the minimum selling price of steel mills. “The Beijing-Tianjin construction steel market has always been the 'leader' of the domestic market. As the price of the Beijing-Tianjin market stabilizes and signs of a slight increase, it will exert a positive influence on the domestic market and promote the slowdown of decline in other domestic markets. Opportunities for a stable rebound have emerged, said Ma Li, manager of consulting at Lange Steel Research Center.
At the same time, the horsepower also worried that "Hebei Iron and Steel Group is the main force of the Beijing-Tianjin steel market, this limited production measures will have a positive effect on the stability of the Beijing-Tianjin region market, but the decisive role is still the market demand. In addition, the stability of the national steel The price also needs the cooperation of other major steel companies."
He believes that reducing production insured has a certain effect on restraining the market from further decline, but it is likely to be a temporary solution. "At present, the average national steel production rate is as low as 75%. Steel prices have fallen so badly that many companies have suffered losses. It is not so much as limiting production prices.
"The sharp decline in the domestic steel market earlier, in addition to dealer panic, there is a clear problem with the original steel pricing methods." Zhang Shibao, senior steel analyst at China Merchants Securities, told reporters, "The market price fell, steel mills The settlement price follows the downward adjustment and the market price and the steel factory price affect each other, making it difficult for the price to stop falling."
Zhang Shibao believes that the effect of limiting production insured prices is still very hard to say, because the current total steel production capacity has grown significantly from two years ago. In the case of oversupply, the cornerstone of this alliance is not solid, as long as it is partially The prices are slightly adjusted back, and some companies will certainly increase their production capacity immediately. The alliance will not break.
The strategy of integration and growth to solve the problem is due to the current decline in downstream production of machinery, home appliances, automobiles, and real estate, and the issue of oversupply in the steel market has become increasingly prominent. Lang Gang, a senior researcher at the Lange Steel Research Center, told reporters: “The demand from the real estate industry accounts for about 25% of the steel consumption. This part of the market is stagnant, which means that one quarter of the production capacity is not exported.†This reporter learned that this year from 1 to 8 During the month, the country’s total automobile production increased by 14.9% year-on-year, nearly 10 percentage points lower than the same period of last year, of which output fell by 3.3% year-on-year in August, and the first negative growth in years occurred.
Li Zhangjun, sales staff of a steel trading company in Beijing, said: “October steel prices, especially real estate materials, fell by 100 to 200 yuan/ton per day, and the prices of color-coated and galvanized steel fell by 500 to 600 yuan/year before the end of the decade. T. At the same time, the inventory of each steel plant has also increased significantly."
Statistics show that from January to September this year, the sales revenue of iron and steel enterprises was 2098.2 billion yuan, a year-on-year increase of 39.0%, and a profit of 132.6 billion yuan. However, in September, the loss was 1.15 billion yuan, and the loss was 32.4%. "Now steel prices and costs are not loss-free, but whoever produces them," said Xu Zhongbo, a professor at Beijing University of Science and Technology.
Li Xinchuang, deputy director of the China Metallurgical Industry Planning and Research Institute, believes that such measures of forced production cuts have exposed the ills of Chinese steel companies being led by the market. In this regard, steel companies should spend more time on industrial upgrading before they can gain market initiative.
Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association, said in an interview with reporters that “the global economy is weak and domestic inflation pressures continue. This determines that the steel industry will not be able to emerge from the downturn in a short period of time. In such a severe environment, it is inevitable. It is a process of industry restructuring and scouring.†He suggested that steel companies should change their business concepts and develop high-end products, and at the same time vigorously develop the modern logistics industry represented by deep processing of steel products to further reduce raw material fuel and production logistics costs. Increase the added value and utilization of steel. In addition, we must vigorously promote the construction of the futures market for steel products and raw materials, increase our country's pricing power for steel and iron and steel raw materials, and accelerate the construction of domestic and overseas iron and steel original fuel bases.
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