"Steel traders should fully recognize the changes in 'steel demand' brought about by the fresh coronary pneumonia epidemic, and strive to survive in difficult times, waiting for the opportunities brought by the next round of economic recovery." Under the new changes in the steel market and the new environment, Ren Qingping, chairman of Shanghai Wubo Steel Structure Materials Co., Ltd., said this in an interview with a reporter from China Metallurgical.

The impact of overseas epidemic chain reaction on China's steel market cannot be ignored

Ren Qingping said that the reality that the epidemic caused the weakening of steel demand intensity in the first quarter of this year cannot be ignored. In order to prevent the spread of the epidemic, most of the upstream and downstream enterprises in the steel industry delayed the start of construction from February to March. Many major construction projects stopped construction, and the real estate market cooled sharply, causing a major impact on the domestic economy in the short term.

According to data from the National Bureau of Statistics, from January to February this year, the national fixed asset investment (excluding farmers) was 333.32 billion yuan, a year-on-year decrease of 24.5%. Among them, infrastructure investment fell by 30.3% year-on-year, down 34.1 percentage points from December last year; national real estate development investment fell by 16.3% year-on-year, down 26.2 percentage points from December last year. From the perspective of month-on-month changes, fixed-asset investment (excluding rural households) fell by 27.38% in February. From January to February, the added value of industrial enterprises above designated size actually declined by 13.5% year-on-year; while the added value of industrial enterprises above designated size fell by 26.63% month-on-month in February. From January to February, foreign trade data also performed poorly. The total value of national imports and exports fell by 11.0% year-on-year, of which total export value fell by 17.2% and total import value fell by 4.0%. The impact of exports was relatively greater.

"Due to the impact of the epidemic, domestic economic construction has been affected, the demand for steel has also been significantly reduced, inventories have risen sharply, and manufacturers' sales pressure has increased." Ren Qingping said. According to statistics from the China Iron and Steel Association, in early March, the social stocks of five major steel products in 20 cities were 20.21 million tons, an increase of 1.16 million tons from the previous period, an increase of 6.1%; an increase of 13.39 million tons from December 2019, an increase 196.3%. From the perspective of the increase in inventories of major steel products, the stock of rebar, wire, and other construction steel increased the most, at a historically high level. The steel stocks and steel mill stocks have both increased, resulting in a sharp and rapid decline in the steel market price. In February this year, the price of rebar in the Shanghai market fell by 360 yuan / ton, the price of the high-end wire fell by 290 yuan / ton, the price of cold-rolled coil fell by 230 yuan / ton to 290 yuan / ton, and the price of hot coil fell by 380 yuan / ton. The price of heavy plates fell by 180 yuan / ton to 220 yuan / ton. The sharp drop in steel prices in February this year was uncommon in the same period in previous years.

With the recent domestic epidemic situation gradually being controlled, various enterprises have accelerated the pace of resumption of production, a large number of major infrastructure projects around the country have resumed construction, and the demand for steel has gradually improved. However, Ren Qingping pointed out that the current situation of resumption of work for downstream steel companies in different parts of the country is different, and it will take time for all resumption of work. Moreover, the prevention and control of the epidemic cannot be relaxed. These are all uncertain factors that affect the "steel demand" in the later period.

Ren Qingping pointed out in particular that the rapid spread of the New Coronary Pneumonia epidemic worldwide has caused major global economies to be impacted and will naturally affect China ’s foreign trade. The situation facing China ’s steel exports is not optimistic. The data of the General Administration of Customs on March 7 showed that from January to February 2020, China's cumulative export of steel products was 7.811 million tons, a year-on-year decrease of 27.0%. If the global epidemic continues to deteriorate, it is difficult for China's steel exports to improve, which will directly affect the domestic steel market, or it will exacerbate the contradiction between supply and demand in the domestic steel market.