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[with the start of the second round of electricity price reduction, can the steel industry "get a piece of the pie"? ]
Jun 17,2019 18:51CST
translation
Source:SMM
The content below was translated by Tencent automatically for reference.

In order to implement the requirement of "a further 10% reduction in the average price of electricity for general industry and commerce" in the 2019 government work report, the National Development and Reform Commission has issued two batches of measures to reduce the price of electricity for general industry and commerce, the first of which has been implemented on the ground since April 1. On 15 May, the National Development and Reform Commission again issued the Circular on the reduction of electricity prices for General Industry and Commerce, which clearly defined the main price reduction measures, and requested all provinces and cities to study and put forward specific plans for using the above price reduction space to reduce the electricity price for local general industry and commerce accordingly, and issue a document before the end of May in accordance with the procedure, and formally implement it on July 1. Therefore, recently, Hubei, Sichuan, Guangdong and other places have launched the second batch of electricity price reduction policies one after another.

It is reported that the general industrial and commercial electricity price, as the highest of the four major categories of national sales electricity price (residential electricity price, agricultural electricity price, large industrial electricity price, and general industrial and commercial electricity price), is suitable for commercial enterprises and small industrial enterprises. Its reduction has a certain negative effect on small and medium-sized enterprises, and as a steel industry with high power consumption, that is, it is more sensitive to electricity price. Its electricity consumption (including long process steel mills and short process steel mills) belongs to large industrial power consumption, and the general industrial and commercial electricity price reduction has no direct impact on it. And according to SMM research, at present, under the condition that the steel price continues to weaken and the cost, that is, the scrap price, has not fallen, the profits of the electric arc furnace steel mills, which mainly produce energy, are constantly compressed (according to the SMM data model, as of today, calculated by the tax scrap steel price of 2230 yuan / ton, the electric arc furnace steel mills have turned into profits and lost 20 yuan per ton of steel), and some regional electric arc furnace steel enterprises have already reduced or stopped production. Among them,

Steel mill A (southwest): since the first ten days, the profit has been reduced to dozens of yuan (profit of about 200 yuan / ton at the beginning of the month), if the later price continues to fall, or will reduce production.

Steel mill B (East China): as the steel mill has entered a loss state (profit of about 50 yuan / ton at the beginning of the month), the start-up time has been reduced by 6 hours, and the average daily output has been reduced by about 600 tons.

However, from the specific scope of implementation, because the construction of infrastructure sites, real estate development or other enterprises and institutions infrastructure construction temporary power consumption and part of the small-scale manufacturing power consumption belong to the scope of application of the general industrial and commercial electricity price, so the reduction may have a certain boost to the market sentiment.

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