Economic Observer network reporter Chen Shan “overcapacity is intensifying, domestic demand is insufficient, exports are growing sharply, raw material prices are strong, the average price of finished materials is moving down, and industry profits are meager.” On November 25, Liu Taoran, president of Lange Group, summarized the development situation of the steel industry in 2023 with such a sentence at the “19th China Steel Industry Chain Market Summit and Lange Steel Network 2023 Annual Meeting”.
At the above meeting, a number of steel enterprises said that in 2023, the steel industry has encountered the most serious challenge in the past five years: the steel market price has fallen significantly, the profits of steel enterprises have shrunk substantially, and the operation of steel circulation enterprises is also more difficult.
Xu Guangyou, deputy general manager of Tianjin Youfa Steel Pipe Group Co., LTD., said at the meeting that in 2023, steel consumption went down, production went down, steel prices were violently volatile, and the benefits of the steel industry declined sharply under the superposition of multiple factors. He believes that the current Chinese economy is in the window period of structural adjustment, affected by the steel industry demand has been changed from the incremental market to the stock market, and the marginal effect of the market is shrinking, in this case, the past extensive operation is no longer suitable for the development of the industry.
According to the statistics of the China Iron and Steel Industry Association, the first three quarters of this year, the key statistics of iron and steel enterprises operating income 4.66 trillion yuan, down 1.74%, the total profit of 62.1 billion yuan, down 34.11%, the average profit margin is only 1.33%, in the 41 industrial categories ranked behind, at a low level.
At the meeting, Li Gang, co-chairman of the China Metal Materials Circulation Association, also introduced, “At present, the entire steel industry chain, especially steel enterprises, have serious losses.” According to statistics, the current processing enterprises, including the production end of the long process, short process there are 2,000 steel processing enterprises, the loss of more than 70%, 500 enterprises above the scale, the loss of 80%; There are 38 listed steel companies, but only eight of them made profits from January to September.
Whether the steel industry can reverse the loss situation in 2024 is closely related to whether steel prices can recover and whether steel production costs can be reduced. For the steel price trend in 2024, Luo Lixin, director of the Marketing Department of Jianlong Group, is more optimistic, and he analyzed that the impact of steel prices is mainly two factors, macroeconomic policies and raw material prices. At present, the price of ore is relatively strong, the entire supply side is tight, and even higher prices will appear next year; Coking coal is also a tight trend, which has great support for the price of finished materials. According to this, he believes that “the overall market is a warm trend, but because of the price of raw materials, steel mills may still be more difficult, so steel also has to do some structural transformation, including the transformation of enterprises.”
Du Jiang, deputy general manager of Xiangtan Iron and Steel Group Co., LTD., also believes that in 2024, the bulk commodities that affect the operating costs of steel mills will remain high, and the cost is unlikely to be lower than this year. Steel prices are expected to remain stable and volatile next year.
For the steel price trend next year, Zhou Guofeng, deputy general manager of Lingyuan Steel Group procurement and marketing center, said, “Due to the landing of various policies, it is expected that the steel industry will be better in the second half of next year than in the first half.” Second, price fluctuations next year are unlikely to occur due to the decline in speculative properties and the decline in the leading role of futures.
According to the monitoring data of the Lange steel network, the average price of various varieties of steel in 2023 fell by 10% compared with 2022, the performance of raw materials is highly differentiated, the price of iron ore was basically flat compared with the same period last year, but the price of coke fell by about 20% compared with last year, and the average decline of scrap steel prices and steel was basically flat, about 9%. Ma Li, chief analyst of Lange Steel network, believes that the supply and demand of steel at home and abroad in 2024 is basically balanced, so the price is expected to be basically flat in 2024 and 2023, which will end the sharp decline in prices for two consecutive years.
