[SMM analysis] the cost impact of the new thread standard will soar to 500000 yuan / ton steel enterprises soon after the implementation of the new thread standard?

The new national standard of rebar will be implemented on November 1. In order to meet the new national standard, rebar needs to add vanadium, niobium and other alloy elements. Before that, the annual output of rebar in China is about 220 million tons, of which about 60 million tons have been added vanadium. Even if the export of 20 million tons of rebar does not need to add vanadium, there are still about 140 million tons of vanadium to be added. Since September 12, 2018, the price of vanadium has soared from 272500 yuan / ton to 500000 yuan / ton on October 25, 2018. At present, vanadium prices are still in the rising channel. SMM iron and steel research found that the implementation of the new thread target will lead to the thread production cost will be raised by about 150 to 300 yuan / ton, but at present, most steel mills are profitable, and the impact of the new standard on output is limited.

What is the effect of the immediate cost of the new thread standard on the output?

SMM Iron and Steel has investigated many steel mills in China. The new screw thread standard has a slightly different effect on the production cost of different types of steel mills, about 150 yuan / ton, and the manufacturer generally feedback that the impact of the new standard on the output is relatively limited.

Blast furnace enterprise

The implementation of the new standard has basically no impact on the output, and the new standard will be strictly implemented from November 1. Most steel mills have already begun to try out the new standard products. According to the previous production status, the production cost of steel mills has increased by 0 to 300 yuan / ton, but at present, the profit per ton of thread steel in long process enterprises is still more than 1000 yuan per ton. Therefore, most of them do not have production reduction plans.

No water piercing steel enterprise

The cost increase is less, and the feedback of individual steel mills is affected by the great increase of the purchasing cost of new thread Peugeot V-mn alloy, and the production cost is increased by about 20 to 30 yuan / ton, which has no effect on the production.

Weak water piercing steel enterprise

The cost increases by 100 to 150 yuan / ton, which has little impact on the production.

Strong water piercing steel enterprise

The increase in cost is about 200 to 300 yuan / ton, which mostly means that the output is basically not affected, and there may be a reduction in production caused by trial rolling in individual steel mills.

Arc furnace enterprise

At present, the profit per ton of steel is about 500 yuan / ton, and the new standard will increase the cost by about 200 yuan / ton. Even if the new standard is implemented, the steel mill still has obvious profits, so the steel mill will not take the initiative to reduce production. As far as technology is concerned, steel mills have limited feedback on the impact of the new standard on production, and the steel mill said it plans to strictly implement the new standard on November 1.

Billet adjusting and rolling enterprise

Manufacturers vary greatly on the extent of cost increase, ranging from 140 to 400 yuan per ton. However, at present, most of them still have a profit of about 100 to 200 yuan / ton, so most of them still maintain the state of full production, and there is no production reduction plan for the time being.

Feedback from individual steel mills, the current alloy billet is more abundant, there is no procurement difficulties, as far as the procurement cost of alloy billet is concerned, the cost is expected to increase by about 140, according to the current price is still about 150 profits, will not reduce production.

There is also feedback from individual steel mills that the purchasing cost of alloy billet is expected to increase by 220 to 280 compared with the previous cost. Although there is no difficulty in purchasing for the time being, the substantial increase in the cost of alloy billet has led to more than half of the profits of steel enterprises being swallowed up, and if there is a loss in the later period, We don't rule out a reduction in production.

A small number of billet rolling enterprises said that the implementation of the new standard is in doubt, temporarily in the wait-and-see stage.

To sum up, the implementation of the new thread target will lead to a higher thread production cost of about 150 to 300 yuan / ton. Because the blast furnace and electric arc furnace enterprises make a lot of profits, the impact on their output is limited; the cost increase of billet rolling enterprises is quite different. At present, according to the investigation results, the implementation of the new standard has not affected its output for the time being, and SMM steel will continue to follow up in the later stage.