"Under the current market situation, steel enterprises should also maintain strategic focus, adhere to self-discipline to control production and reduce inventories, especially large enterprises should play a regional leading role to maintain market stability." On April 30, the China Iron and Steel Association 2024 first quarter information conference (hereinafter referred to as the conference) was held in Beijing. Jiang Wei, deputy secretary of the Party Committee, vice president and secretary-general of the Steel Association, pointed out at the conference that there is still room for further control of production and inventory reduction in steel enterprises.

Conference site

Jiang Wei introduced the overall operation of the steel industry in the first quarter, the results achieved in high-quality development and the work to be focused on in the later period. He believes that the steel industry showed great resilience in the first quarter of the development, which strongly supported the higher demand for steel products in the transformation and upgrading of the downstream industry, but also faced with serious market supply and demand imbalances, steel prices fell significantly, high iron ore prices and other difficulties, increasing the difficulty of improving the quality and efficiency of the industry.

"Since March 28, the Steel Association issued the" recognize the situation to maintain the steady and orderly development of the steel industry "proposal, the inventory of steel enterprises has declined significantly, steel prices have stabilized and recovered slightly, but in the same period, the price of imported iron ore has rebounded 19.5%, seriously affecting the economic benefits of the industry." Jiang Wei stressed.

At the meeting, Steel Association deputy Secretary General and director of the market research Department Shi Hongwei, deputy secretary general and director of the Industrial operation Department Chen Yuqian, deputy chief engineer Huang Dao, Deputy Secretary general and director of the Ministry of Science and Technology Environmental Protection Feng Chao attended the conference and answered reporters' questions. Su Changyong, Deputy Secretary-General of the Steel Association and director of the International Cooperation Department, chaired the meeting.

The first quarter: the industry operation of "three high and three low" industry benefits declined year-on-year

Jiang Wei introduced that in the first quarter, the profit of steel enterprises declined significantly, and the steel industry operation showed a situation of "three high and three low" (high output, high cost, high inventory, low demand, low price and low efficiency). The specific performance is as follows.

First, steel production fell year-on-year, and consumption fell even more. According to the data released by the National Bureau of Statistics, in the first quarter, the national crude steel production of 257 million tons, down 1.9% year-on-year; Pig iron output was 213 million tons, down 2.9% year-on-year; Steel production of 336 million tons, an increase of 4.4%. In the first quarter, the country's equivalent crude steel apparent consumption of 232 million tons, down 4.7% year-on-year. Overall, steel supply is stronger than demand.

Second, steel exports increased year-on-year, while imports declined year-on-year. According to the General Administration of Customs data, in the first quarter, the country exported 25.8 million tons of steel, an increase of 30.7%, the average export price of 789 US dollars/ton, down 33.4%; Cumulative imports of steel 1.75 million tons, down 8.6%, the average import price of $1,642 / ton, down 4.1%; Equivalent to 24.38 million tons of crude steel net exports, an increase of 33.7%. Since the beginning of this year, the trend of steel exports "volume increase and price decline" is obvious.

Third, enterprise inventories rose year-on-year, reaching the highest in the same period in recent years. From the perspective of enterprise inventories, in mid-March, the steel inventory of key statistics steel enterprises reached 19.53 million tons, the highest level since the beginning of this year, and the highest level in the same period of nearly four years, second only to 21.41 million tons during the epidemic in 2020. As of the end of late March, the key statistics of steel enterprises steel inventory of about 18.43 million tons, down 5.66% month-on-month, an increase of 6.8% year-on-year, higher than the historical peak of 18.07 million tons in late March 2020, the highest level in the history of the same period.

Fourth, steel prices fell year-on-year, and iron ore prices rose year-on-year. According to the monitoring of the China Iron and Steel Association, in the first quarter, the average CSPI (China Steel Price Index) was 109.95 points, down 6.29% year-on-year. Among them, the average CSPI long material index was 112.10 points, down 8.80% year-on-year; The average plate index was 109.04 points, down 6.92% year-on-year. According to customs data, in the first quarter, China's imports of iron ore 310 million tons, an increase of 5.5%; The average import price was $129.5 / ton, up 10.6% year on year. "Steel prices fell by 6.29%, and imported ore prices rose by 10.6% in the same period. Unreasonable ore prices have seriously eroded the efficiency of the steel industry." Jiang Wei pointed out.

Fifth, the decline in revenue is greater than the decline in costs, and the industry efficiency is declining year-on-year. According to the statistics of the Steel Association, in the first quarter, the cumulative operating income of the key statistics of iron and steel enterprises was 1.49 trillion yuan, down 4.55% year-on-year; Operating costs were 1.42 trillion yuan, down 3.99% year-on-year, and the revenue decline was 0.56 percentage points larger than the cost decline; The total profit was 8.708 billion yuan, down 47.91% year-on-year; The average profit margin was 0.58%, down 0.49 percentage points year-on-year. As of the end of March, the asset-liability ratio of key statistics steel enterprises was 63.04%, an increase of 0.75 percentage points year-on-year.

Sixth, environmental indicators continue to improve, and environmental performance continues to improve. According to the statistics of the Steel Association, in the first quarter, the amount of water withdrawn by tons of steel in the key statistics of iron and steel enterprises fell by 1.71% year-on-year, and the amount of chemical oxygen demand, ammonia nitrogen, volatile phenol, total cyanide, suspended solids, petroleum and other pollutants discharged in the wastewater fell by 23.44%, 20.93%, 62.55%, 24.55%, 16.23%, 41.70% year-on-year, respectively. The emissions of sulfur dioxide, particulate matter and nitrogen oxides per ton of steel decreased by 2.99%, 5.94% and 6.49%, respectively, and the comprehensive energy consumption per ton of steel decreased by 0.26%.

Remarkable results: the speed of product structure adjustment has significantly accelerated the digital transformation in the forefront of the industrial field

"Faced with the severe market situation, the steel industry actively implemented the new development concept, accelerated the cultivation of new quality productivity, and promoted high-end, intelligent and green transformation, and high-quality development continued to achieve new results." "Jiang Wei said.

In terms of high-end, the speed of product structure adjustment in the steel industry has significantly accelerated, and the proportion of steel used in manufacturing has increased from 42% in 2020 to 48% in 2023, showing a further rise. In the first quarter, medium and thick wide steel strip, hot rolled thin and wide steel strip, cold rolled thin and wide steel strip, coated plate (strip) and hot rolled sheet were the varieties with the largest output growth, increasing by 9.0%, 10.4%, 16.5%, 14.5% and 63.8%, respectively. "From the perspective of export varieties, the export volume of plate is large and the growth is obvious, and the export increment of hot-rolled coil, coated plate and hot-rolled thin and wide steel strip is larger." In the first quarter, China's exports of high value-added products accounted for more than 35 percent." "Jiang Wei said.

In terms of intelligence, the digital transformation of the steel industry is at the forefront of China's industrial field. "According to the research of the Steel Association, the investment in digital intelligent transformation of enterprises participating in the evaluation reached 38.5 yuan per ton of steel, an increase of 23.9% over the previous year." Jiang Wei further introduced that enterprises above the scale of 5 million tons have basically realized the connection of management and control, the integration of production and marketing and the seamless industry and finance. Smart factories and intelligent centralized control centers are becoming a new trend, 40% of enterprises in the main production line application of 3D visual simulation technology, 79.6% of enterprises pilot application of big data models, 18.4% of enterprises have carried out local AI applications.

In terms of green, continue to promote green and low-carbon transformation, and strive to complete the ultra-low emission transformation task on time. As of April 23, 2024, a total of 136 steel enterprises have completed or partially completed ultra-low emission retrofitting and assessment monitoring. Among them, 95 enterprises completed the whole process of ultra-low emission transformation, involving crude steel production capacity of about 449.5 million tons, tons of steel ultra-low emission transformation investment of about 453.8 yuan; 41 enterprises completed some ultra-low emission transformation publicity, involving crude steel production capacity of about 141 million tons; The 31 companies currently under review involve crude steel production capacity of about 54 million tons.

In addition, 58 enterprises with a production capacity of 440 million tons as the ultimate energy efficiency cultivation enterprises are actively promoting the implementation of the ultimate energy efficiency project, which has brought very considerable energy saving and carbon reduction. At present, the steel industry EPD (Environmental Product Declaration) platform has issued a total of 120 EPD reports, downloaded more than 23,000 times.

Prospect later stage: strengthen the self-discipline control yield adjust and optimize the variety structure

Jiang Wei pointed out that at present, China's economic "gold content" and development resilience are improving, and the demand for steel to promote new industrialization will remain at a high level for a long time, and requires better quality, higher performance and lower energy consumption. At present, the operation situation of the steel industry is relatively severe, and the following work should be focused on in the next stage.

First, strengthen self-regulation and production control, and strive to improve economic efficiency. "Self-discipline to control production and reduce inventory is the primary task of the current industry to ensure efficiency." Jiang Wei stressed that the operation of the steel industry presents "three high and three low" characteristics, mainly because the supply elasticity is too large, the market demand declined year-on-year, the enterprise inventory increased significantly, the upstream raw material prices have support, the steel prices have inhibition, "it is urgent to unify the thinking of the whole industry, reduce the production intensity, eliminate vicious competition, and promote the stock of steel mills to return to the normal level of previous years as soon as possible."

"Especially with the gradual recovery of downstream demand in the near future, there are some speculation on steel prices and benefits before low and then high, and it is necessary to be vigilant about the ensuing resumption of production impulse leading to too fast release of capacity, once again causing a new round of supply and demand imbalance." Jiang Wei said that enterprises should maintain concentration, adhere to the control of production and inventory reduction, practice the principle of "three sets and three do not", and pursue quality operation and effective development.

The second is to adapt to changes in demand, adjust and optimize the variety structure. "Optimizing the variety and adjusting the structure is the key to fighting the market." Jiang Wei said, "Steel Association member enterprises in recent years profit data analysis shows that Xingcheng special steel, Hunan Iron and Steel, Xinxing cast pipe, Longteng special steel and other leading enterprises in the common feature is high value-added products, steel varieties are becoming the core factors affecting the profitability of enterprises."

According to reports, with the optimization and upgrading of China's industrial structure, the steel demand structure is also changing: the trend of decline in construction steel demand has become an industry consensus, the steel volume of automobiles, home appliances, ships, machinery and other manufacturing industries has risen steadily, and the demand for steel in wind power, nuclear power and other new energy industries has grown rapidly. "It is estimated that large-scale equipment renewal can drive the increase in high-end industrial steel consumption of about 8 million tons. With the gradual implementation of relevant supporting policies and measures, steel demand in manufacturing, energy and other industries will usher in new opportunities." "Jiang Wei said.

Third, change the export model and strengthen international exchanges and cooperation. "Mainly meeting domestic demand is the basic positioning that China's steel has always adhered to." Jiang Wei thinks.

"In the first quarter, steel exports continued the growth trend of 2023, which is a reflection of enterprises actively participating in international competition and maintaining strong competitiveness in accordance with market-oriented principles." However, the situation of steel exports showing a 'volume increase and price decline' is not sustainable, in the current world economic and trade situation, enterprises must pay attention to the risk of increased trade friction." Jiang Wei stressed.

According to reports, in 2023, China suffered 4 cases of original trade remedy investigation, the first quarter of this year has received 5 cases of original trade remedy investigation (2023 so far the original trial and review investigation and anti-circumvention investigation a total of 43), the number of cases initiated by emerging markets and developing economies is rising.

"Enterprises should treat rationally and optimize the structure, and actively participate in high-level international competition and services by encouraging the export of high value-added products." At the same time, we will strengthen exchanges and cooperation between upstream and downstream, at home and abroad, and increase direct supply to end users by holding international exhibitions such as the China International Steel Conference." Jiang Wei suggested.

Fourth, deepen the potential of the bid and maintain the stable operation of the industrial chain. "The bid to tap the potential to reduce costs, which is an important magic weapon to deal with the market downturn." "Jiang Wei said.

In the first quarter, steel prices fell 6.3% year on year, and the average price of iron ore imports rose 10.6% year on year, and iron ore prices are easy to rise and hard to fall, which seriously eroded the normal operating profits of the steel industry. In the face of the high price of raw fuel and the continuous increase of green low-carbon investment, steel enterprises should continue to deepen the potential of the standard, through the full dimension of the standard, the whole system to find the error, all-round improvement, reduce costs, improve efficiency, anti-risk, and strive to maintain the stability of economic benefits. "In general, raw fuels such as iron ore, coking coal and coke tend to be loose, and the upstream and downstream of the industrial chain should meet each other halfway and deepen cooperation to avoid the impact of irrational price fluctuations on the stable operation of the industrial chain." Jiang Wei stressed.

Jiang Wei concluded that on the whole, at present, the understanding of the market situation in the whole industry is further unified and the consensus is further condensed. Baowu, Angang, Shougang, Hesteel, Shagang and other major iron and steel enterprises are actively practicing the business principle of "three sets and three don't", and strive to improve the quality and efficiency of production and operation. "In the later period, as the national steady growth policy gradually plays a role in driving steel demand, and the industry-wide self-disciplined production control and inventory reduction achieve phased results, the steel industry is confident of further stable operation, quality and efficiency improvement, and continue to make steel contributions to the national economy and social development." "He said.