SMM News: in the first quarter, steel enterprises "volume increase and profit decrease" means the reappearance of overcapacity in the iron and steel industry? Meng Wei, spokesman for the National Development and Reform Commission, responded on the 17th that steel domestic demand and exports achieved double growth in the first quarter, and that the capacity utilization rate of the industry continued to remain within a reasonable range.
On May 17, the National Development and Reform Commission held a press conference on timing and theme. According to a reporter, steel production reached a new high in the first quarter, but the efficiency of iron and steel enterprises declined significantly in the same period, and the total profit fell by 30.2 percent compared with the same period last year. What is the cause of this phenomenon? Does it mean that there is a resurgence of overcapacity in iron and steel, and what can the relevant departments do to deal with it?
Meng Wei said that in the first quarter, in the context of China's overall economic stability and steady progress, the downstream steel industry in the real estate, railway infrastructure, home appliances and other industries have achieved rapid growth, promoting the growth of steel consumption. In addition, China's steel exports rose 12.6 per cent in the first quarter from a year earlier, significantly better than expected. Under the joint action of various factors, the national crude steel output in the first quarter was 231.07 million tons, an increase of 9.9 percent over the same period last year, and maintained a relatively rapid growth trend.
Meng Wei pointed out that due to the rise in iron ore prices and steel prices fell two factors, the overall efficiency of the steel industry has declined in the first quarter.
In terms of iron ore, the price of imported iron ore has continued to rise since the first quarter, especially after the dam break in Vale, Brazil, iron ore prices rose sharply after speculation in the futures and trade markets. At the end of January, the price of imported iron ore rose to US $81.71 / ton, and in February, the price of imported iron ore exceeded US $90 / ton. Prices at the end of March were $84.90 a tonne, up 33.5 per cent from a year earlier, down but still high.
In terms of steel prices, after falling rapidly in November 2018, they began to stabilize and recover slowly in the first quarter of this year. In the first quarter, the comprehensive evaluation index of China's steel price index averaged 107.88 points, down 4.43 percent from the same period last year. There is still a big gap between the high loci in the early stage and the high loci in the early stage.
Meng Wei said that overall, the current steel industry is still relatively stable, capacity utilization continues to maintain a reasonable range.
Meng Wei said that the next step, the NDRC will pay close attention to the overall operation of the steel industry.
On the one hand, we will continue to adhere to the principles of marketization and the rule of law, unswervingly implement the various tasks of resolving iron and steel excess capacity, maintain a high-pressure situation of zero tolerance for illegal and illegal production capacity, and consolidate the achievements in resolving excess capacity.
On the other hand, we should continue to give full play to the role of industry associations, speed up the innovation and development of the industry, strengthen industry coordination and self-discipline, do a good job in industry monitoring and analysis, and take timely and effective measures to promote the smooth operation of the steel market.