Since the beginning of this year, the pace of economic development in China has declined somewhat, and the demand for steel products has slowed down. Affected by the relatively high level of steel production, the domestic steel market still exceeds supply. Although the demand situation improved slightly in July, and steel prices rebounded slightly, the overall supply and demand contradictions did not change significantly, and the prices of raw materials such as iron ore rose rapidly. In the later period, the production and operation situation of iron and steel enterprises remained severe.

In the first seven months of the year, the iron and steel industry maintained its growth in iron and steel production and showed a declining trend. According to data from the National Bureau of Statistics, from January to July, the country’s output of pig iron, crude steel and steel (including repetitive materials) was 42.04 million tons, 4.558 million tons and 609.52 million tons, respectively, an increase of 6.0%, 7.1%, and 10.4% year-on-year respectively. The growth rate over the same period of last year increased by 2.8, 5.0 and 4.3 percentage points respectively; the national average daily crude steel production was 2.15 million tons, equivalent to an annual output of 785 million tons of crude steel.

In July, the country’s output of pig iron, crude steel, and steel (including repetitive materials) was 60.02 million tons, 65.47 million tons, and 90.75 million tons, respectively, an increase of 5.0%, 6.2%, and 10.9% year-on-year, respectively; average daily crude steel production was 2,111,900 tons. The chain fell by 43,600 tons, a decrease of 2.02%, and it has dropped for the third consecutive month.

Steel exports have increased and imports have declined slightly. According to customs statistics, from January to July, 35.83 million tons of steel were exported, an increase of 4.3 million tons, an increase of 13.7%; steel imports were 8.01 million tons, a year-on-year decrease of 100,000 tons, a decrease of 1.3%; imported steel billets were 340,000 tons, an increase from the same period last year. 120,000 tons, an increase of 54.5%; total billet equivalent to 29.26 million tons of crude steel exports, an increase of 4.65 million tons, an increase of 18.5%. From January to July, the import of iron ore was 45.723 million tons, an increase of 33.7 million tons, an increase of 8.0%.

In July, China exported 5.15 million tons of steel, a decrease of 140,000 tons, a decrease of 2.65%, and an import of 1.18 million tons, an increase of 100,000 tons, an increase of 9.26%. Steel exports fell for the third consecutive month.

In July, 50,000 tons of billets were imported, which was the same as last month. The total amount of the steel blanks was equivalent to 4.17 million tons of net crude steel exports, a decrease of 260,000 tons from the previous month, a decrease of 5.8%.

Steel prices showed low volatility. With the increase in demand, production and inventory, steel prices rose slightly. At the end of July, the CSPI steel comprehensive price index of the China Iron and Steel Association was 100.48 points, an increase of 1.96 points or 1.99% from the end of June; a year-on-year decrease of 7.60 points, a decrease of 7.03%. Although steel prices have rebounded, they are still at a low level.

Steel stocks continue to decline, but are still at a high level. Affected by market expectations, steel stocks rose rapidly in the first quarter. After March, demand started on the one hand and steel stocks showed a continuous downward trend, but they are still at a relatively high level. At the end of July, steel society stocks in major markets nationwide were 14.21 million tons, down 7.58% year-on-year, but still up by 19.64% from the beginning of the year. According to the statistics of the steel and iron associations in the third quarter, at the end of July, the steel stocks of the member steel companies were 12.35 million tons, a year-on-year decrease of 12.9%, but an increase of 17.84% from the beginning of the year.

The economic benefits have improved and the overall profitability is low. According to the statistics of the Iron and Steel Association, from January to July, member steel companies realized a total sales income of 2105.9 billion yuan, an increase of 1.02% over the same period of last year. After offsetting the profit and loss, they achieved a profit of 4.943 billion yuan, a year-on-year growth of 4.554 billion yuan and an average sales margin of only 0.23%. The loss was 34.9%, down 2.3% year-on-year. Among them, the profit for the month of July was 2.301 billion yuan (a loss of 699 million yuan last month).

From January to July, the profitability of large and medium-sized steel companies was still at the lowest level in the industry. From the perspective of raw material costs, in the first half of the year, the decline in iron ore procurement costs was significantly less than the decline in steel prices.

The increase in investment in fixed assets in the steel industry fell. According to data from the National Bureau of Statistics, from January to July, the investment in fixed assets of the national steel industry reached 370.5 billion yuan, a year-on-year increase of 5.9%, and a 4.4 percentage point decrease from the same period of last year. Among them, the investment in ferrous metal mining industry was 85.4 billion yuan, an increase of 9.4% year-on-year and 14.6 percentage points lower than the same period of the previous year; the investment in black smelting and rolling industry was 28.51 billion yuan, a year-on-year increase of 4.9%, and 2.0 percentage points lower than the same period of the previous year. However, it increased by 1.6 percentage points from the growth rate of January to June (3.3%).

The trend of the industry's operation is expected to be fine-tuned by national policies, and market demand will be better than the first half of the year. According to the deployment of the State Council and the State Council, adjusting the structure and changing the mode is the main tone of the Chinese economy in the future and in the next few years. In the second half of the year, there may not be any large-scale investment stimulus policies. Steel demand will not have high growth. However, the introduction of policies by the State to increase shantytowns, increase railways, urban rail transit, and investment in energy-saving and emission reduction industries will help increase the demand for steel products. It is expected that the market situation in the second half of the year will be better than the first half of the year.

The output remains high and the market supply exceeds demand. Although the market demand in the second half of the year will be better than that in the first half of the year, it is difficult to change the situation of excess steel production capacity. In July, the average daily output of crude steel in the country remained at a relatively high level even though it fell for the third consecutive month, and it is expected to maintain a growth rate of approximately 7% throughout the year. At the same time, due to low industrial concentration and high degree of product homogeneity, companies compete for orders and price cuts, steel prices are difficult to rise significantly.

The international market is in the doldrums and the export of steel products has become more difficult. Since the beginning of this year, the global economic recovery has been slow and the demand for steel products has grown weak. In the first half of the year, after deducting Chinese production, global crude steel output fell 2.7%, the EU (27 countries) fell 5.1%, the United States dropped 6.4%; Russia fell 2.9%, South Korea decreased 5.3%, Japan and India increased only 1.2%, 2.5% respectively .

In the global market downturn, from January to July, China exported 35.83 million tons of steel, an increase of 13.7% year-on-year, and achieved notable results. However, due to the weak international market demand, increased trade frictions, and the impact of *** appreciation, China’s steel exports have dropped for the third consecutive month in July. In the third quarter and the second half of the year, the difficulty of exporting steel products in China will increase, and it will still be a downward trend from the previous quarter. It is expected to grow at 8% to 10% for the full year.

With rising pressure on costs, the industry will still be operating at a meager profit. In July, with the slight rebound in steel prices, the prices of raw materials for steel production also rose. In particular, the price of iron ore quickly rose. The current market price of imported iron ore has reached US$140/tonne, which is higher than that in July. At the beginning, it increased by more than 20 US dollars per ton; domestic ore prices also rose significantly; coal and coke prices also rebounded. Coupled with the rise in corporate environmental protection and labor costs, the economic benefits of the industry in the third quarter and the second half of the year will remain at a meager level.