The steel industry will be in the second half of the year

China Iron and Steel Industry Association recently released the industry performance in the first half of the year, showing that China's steel industry is already on the verge of loss. However, analysts believe that in the second half of the year, under the background of “stable growth”, infrastructure and affordable housing construction will drive demand for steel. Under the support of demand recovery, the profitability of the steel industry will improve. Insufficient demand for overcapacity The data shows that in the first half of the year, the total realized profits of the steel enterprises of China Steel Association were only 2.385 billion yuan, a significant decrease of 54.549 billion yuan, a decrease of 95.81%; the loss of loss-making enterprises was 14.248 billion yuan, and the loss reached 33.75%. If the investment income is deducted, the main steel industry is actually at a loss. The latest report released by the Steel Logistics Professional Committee of the China Federation of Logistics and Purchasing shows that the domestic steel industry PMI index fell to 44.5% in July, down 4.7 percentage points from the previous month. This reflects the current contradiction between supply and demand in the domestic steel market, and the overall trend is still weak. The warm-up can be expected . In the second half of the year, industry researchers believe that demand will improve and the industry will show a turbulent recovery. From the situation of ordering and exporting orders, the downstream demand for steel products in the third quarter should be somewhat warmed up. The demand side of the steel industry is mainly concentrated in real estate, infrastructure, automobiles, shipbuilding, home appliances, machinery and so on. Among them, real estate accounts for the largest proportion and is the most important downstream industry. At present, in the real estate market, the country proposed to continue to carry out strict regulation and control this year at the beginning of the year. As of now, the regulation and control objectives have not changed. In June, the growth rate of real estate investment and the growth rate of land purchase area continued to decline steadily, and the decline was relatively flat. However, the data also showed that the growth rate of commercial housing sales area rebounded due to “just need”. In the first 20 days of July, the cumulative transaction area of ​​45 key tracked urban commercial houses was 16.396 million square meters, up 63.5% year-on-year, and the average daily transaction area reached 820,000 square meters, higher than the 799,000 square meters in June. The construction of affordable housing in the second half of the year is a bright spot. When the Minister of Finance Xie Xuren laid out the financial work focus for the second half of the year on July 26, he proposed to implement and improve the structural tax reduction policy, accelerate and expand the pilot reform of the business tax and increase the value-added tax, and accelerate the construction of affordable housing and the transformation of various shanty towns. And the renovation of dangerous buildings in rural areas. These will provide strong support for steel prices in the second half of the year. For the steel industry, major engineering projects are always the mainstay of demand, especially major infrastructure projects such as railway construction. Since the second quarter, the number of new construction projects for infrastructure investment in China has increased significantly. The data shows that the planned investment in the newly started projects in the second quarter was 10.18 trillion yuan, a year-on-year increase of 23.3%, the highest level in the quarter. At the same time, in June, the fixed assets investment of the Ministry of Railways was 48.097 billion yuan, and the infrastructure investment was 43.226 billion yuan. Both investment amounts reached a new high this year. Recently, the Ministry of Railways has raised the investment scale of railway infrastructure this year by 64 billion yuan to 470 billion yuan. The multi-government government has also introduced a capital investment plan of 100 billion yuan. The growth rate of China's infrastructure investment will further accelerate in the second half of the year. This year, the Ministry of Railways will accumulate a total of 115 billion yuan in bond financing. The NDRC also encourages local governments to attract enterprises including private capital to participate in or control intercity railway construction in the “intercity railway + property development” model. These will undoubtedly ease the tension of railway infrastructure funds and provide sufficient financial support for railway infrastructure. The downstream demand continues to increase, and the steel industry is expected to pick up.

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