Policy is good for boosting high-performance steel development

The injection of large-scale funds during the “Twelfth Five-Year Plan” will not only create great benefits in the market atmosphere, but also have a very practical effect on the steel industry.

Recently, the “12th Five-Year Development Plan for New Materials Industry” was drafted. During the “Twelfth Five-Year Plan” period, the estimated total output value of China's new materials industry reached 2 trillion yuan, with an average annual growth rate of over 25%.

Among them, high-performance steel is one of the six new materials that have received key support. The state will support enterprises' R&D, industrialization of research results and development of related supporting facilities through tax reductions, subsidies, and major project support. The funds will be jointly undertaken by enterprises and the government, with a conservative estimate of several hundred billion yuan.

The introduction of the above new policies will undoubtedly bring about changes in the steel industry. During the interview, a number of analysts told the Science Times that due to the impact of the new policy, high-end steel and other high-end products will gain a large profit.

New funds are injected into new blood

It is understood that China's steel market has been in a state of high cost and low inventory. The steel industry is facing pressure from rising energy and raw material costs, and industry profits are extremely compressed.

Yuan Zhibin, a researcher in the metallurgical industry of China Investment Consulting, told reporters that the rise in iron ore and sea freight has put a lot of pressure on the profitability of the entire industry. Relevant data shows that in the first week of September this year, the spot price of Qingdao MTR ore rose by 0.8%, while the price of Tangshan iron ore rose by 0.7%.

At the same time, sea freight rates continue to rise sharply. Since the beginning of August, the iron ore shipping prices of Brazil and Oceania to China have increased by 36% to 40% respectively, and the shipping price of Brazil to China has reached US$27.18 per ton in September.

On the contrary, steel market demand is still relatively weak, with stocks exceeding 14 million tons and increasing by more than 20% year-on-year.

“The external and internal environment is not enough to support the future sustainable development of the industry.” Yuan Zhibin said, “The new funds injected by the state through various forms are expected to inject fresh blood into the steel market and help them to usher in new breakthroughs in the market. ”

Sun Jiqing, an industry analyst at Dongxing Securities, believes that the injection of new funds is of great significance in reflecting policy guidance, but in a short period of time, there will be no large-scale outbreak in the high-performance steel market.

“Injecting funds is not enough to support the subsequent development of the entire industry.” Sun Jiqing said, “In general, large steel companies often have a monthly turnover of more than 100 billion.”

At the same time, low-end steel such as rebar, hot-rolled strip and hot-rolled silicon steel cannot be replaced in the strong development of the construction industry. This year, the construction of the national security housing has started 8.68 million sets, which will undoubtedly further drive the demand for building materials.

Say goodbye to the "micro-profit" era

In recent years, the traditional steel industry has encountered a “bottleneck”. Although China's ordinary steel production accounts for 45% of the world's total output, most of them are low-end products with extremely low profitability.

Problems such as overcapacity caused by extensive development and unreasonable product structure have become increasingly prominent. At present, the overall overcapacity of crude steel in China is about 100 million tons, especially for low-end and mid-end products. The profitability has fallen sharply. The gross profit margin has dropped from 15% to 20% before 2008 to less than 10%. For example, at present, the weighted profit of rebar is 85.1 yuan per ton, which is more than 50% lower than the previous month, and the gross profit margin is only 1.72%.

“The whole steel industry is in the era of “fine profit”.” Zhang Xiang, an analyst at Huaxun Investment Industry, concluded.

Not only that, although China is a major steel producer in the world, the research and development and production of high-end products are relatively lagging behind. For example, high-pressure boiler tubes, nuclear power tubes, and special steels still need to be imported a lot. High-performance steel production in developed countries, including Japan, the United States, Germany, and Sweden, accounts for 70% of global production.

Zhang Xiang believes that in the context of China's rapid urbanization construction period, the demand for ordinary steel will slow down, and the development of automobiles, machinery, electricity and petroleum will drive the rapid growth of demand for high-end steel. Therefore, the rise of high-performance steel materials is a good opportunity for the adjustment of the steel industry. It is the general trend to continuously increase the R&D and productivity of high value-added varieties.

The injection of large-scale funds during the “Twelfth Five-Year Plan” period will not only create great benefits in the market atmosphere, but also have a very practical effect on the steel industry.

Because of this, the domestic excellent special steel company has received great attention from brokers and investors. "Science Times" reporter learned that the current domestic special steel production ratio is only about 5%, far lower than the world average of 15% to 20%, and nuclear grade steel is basically monopolized by foreign companies. Therefore, many analysts believe that The special steel plate is the future hope of the industry.

However, Sun Jiqing expressed concern about the industrialization of high-performance steel technology. He said: "Some of the high-performance steel technologies are still at the laboratory level, and the research results have not yet advanced to industrialization." He pointed out that the industrialization process will determine the future prospects of the high-performance steel market.