The steel market is more cautious in 2019
In 2018, China's steel market is booming in both supply and demand, and the market fluctuated upwards. The industry's profits increased and the warming momentum remained unchanged. Looking forward to the situation of China's steel market in the new year, because steel companies are actively increasing production and the external demand environment is severe, the Chinese steel market is more cautious in the new year.
1. The pattern of economic growth remains unchanged, but the economic growth rate slows down.
On the whole, the big pattern of macroeconomic growth at home and abroad will not change in 2019, especially the stable and moderate situation of China's economy has not been destroyed. This has laid the optimistic tone for China's steel market and continues to heat up its new cycle. situation. On the other hand, because of the rise of world trade protectionism, especially the negative impact of the Sino-US trade war, the uncertainty of the external environment of China's steel industry in the new year is still large and must be more cautious.
Recently, as trade protectionism in the world has become more and more fierce, and worried that the Fed’s tightening of monetary policy has triggered turmoil in emerging markets, authoritative institutions have therefore lowered their global economic growth expectations. The International Monetary Fund (IMF) recently predicted that the world economy will grow by 3.7% this year and next year, which is lower than the IMF's forecast of 3.9% in July. The IMF lowered its forecast for US economic growth in 2019 from 2.7% to 2.5%, maintaining the expected 2.9% in 2018; reducing China's economic growth forecast for 2019 from 6.4% to 6.2%, maintaining the expected 6.16% in 2018. The 2018 euro zone growth forecast will be lowered from 2.2% to 2.0%, maintaining the expected 1.19% in 2019. This is the first time the International Monetary Fund has lowered its global economic growth forecast since July 2016.
The slowdown in economic growth in major countries of the world will make the external demand environment of Chinese steel more severe, especially the indirect export of steel is greatly affected. It is estimated that China's steel exports in 2019 will be about 70 million tons, which is the same as that of the previous year, and it is difficult to see a large increase.
However, it is worth noting that due to the devaluation of the RMB, the decline in China's steel exports has narrowed in recent months, and even there has been a year-on-year increase. If China and the United States reach a trade understanding in 2019, China's steel export situation will also improve accordingly. This will be an unexpected surprise for China's steel demand, which is bound to trigger the positive trend of China's steel market.
2. The external demand situation is grim, requiring decision-making departments to stimulate domestic demand more.
There is no doubt that the biggest factor affecting the situation of China's steel market will be the Sino-US trade war now and in the future. This significant impact:
First of all, it is reflected in the adjustment of the macro judgment. That is to say, the economic structure has changed steadily and the downward pressure on the economy has increased. Recently, the Central Political Bureau meeting has made a judgment on the economic situation in which the external environment has undergone "deep changes" and "the downward pressure on the economy has increased."
Recently, the National Development and Reform Commission intensively approved investment projects, of which only 1.4 trillion yuan was approved for the high-speed rail project. Not only that, in order to cope with the emergence of the worst situation, the relevant departments have also entered a number of policy reserves, and so on. All of this is to hedge the downward pressure on the economy caused by the Sino-US trade war, thus laying a solid foundation for the steady growth of domestic steel demand in the new year. It should be said that the greater the external pressure in the future, the stronger the strength in this regard. According to preliminary estimates, the apparent consumption of crude steel in the country will exceed 900 million tons in 2019, an increase of about 4% over the previous year.
3. Major achievements have been made in capacity reduction, but steel companies will also actively increase production.
Although in recent years China’s excessive steel production capacity (including the ban on “strip steel”) has achieved hundreds of millions of tons of huge results, but due to the need for high profits to stimulate and seize the market, Chinese steel companies will continue to increase production in 2019, the country Both crude steel and steel production will increase, once again hitting a record high. It is estimated that the national crude steel output in 2019 will be about 960 million tons, an increase of 4% over the previous year, and the growth rate will drop by 2 percentage points. The national statistical steel output will be 1.15 billion tons, an increase of 5% over the previous year, and the growth rate will also fall. Percentage points.
China's steel output continues to grow, and because of environmental pressures, it has created a strong demand for high-grade imported iron ore in China. It is expected that China's iron ore imports will remain at a huge scale of about 1 billion tons in 2019.
4. steel prices have reached a relatively high level, there is a technical callback space
Since the bottom of the national steel prices in the second half of 2016, and after a period of turbulence, it should be said that the stage of repairing China's steel prices has come to an end. At present, steel mills have a large profit per ton of steel. Traders and speculators who buy on dips also have large floating profits. Therefore, objectively there is room for downward adjustment of sales prices. At the same time, with the relatively high price, the risk will increase. In the banker's control method, the technical callback will also be needed to release the bearish and seek new opportunities for growth. All of this constitutes a market risk and requires market participants to be more cautious.
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