The current steel industry is still facing a weak recovery in steel demand

On October 31, the China Iron and Steel Association held an informal conference for the third quarter. In the first three quarters of this year, the domestic steel industry market demand was relatively weak and the recovery was less than expected. Steel production and consumption, import and export, and prices all fell year-on-year. The operating efficiency of steel enterprises fell sharply, but the asset status was relatively good.

This year, the international commodity market has fluctuated greatly. The prices of raw materials such as coking coal, coke, iron ore, and scrap steel have risen rapidly and remain high. The industry is under enormous pressure to improve economic efficiency.

According to the statistics of the Iron and Steel Association, in the first three quarters, the procurement cost of coking coal of key iron and steel enterprises increased by 51.1% year-on-year, and the procurement cost of injection coal increased by 40.3% year-on-year. Although the procurement cost of imported iron ore decreased year-on-year, it was still higher than that in 2019 and 2020. the same period level. At the same time, affected by the epidemic and rising energy prices, the logistics costs of iron and steel enterprises have also risen sharply, increasing the cost pressure on enterprises.

According to industry analysis, the steel industry has entered a stage of high-quality development, and the current and next few years will still be a window for integration and reorganization. With the advancement of production capacity integration, the increase in the concentration of the steel industry is a certain trend. The reduction of the number of enterprises can optimize the competition structure of the industry and reduce disorderly competition, which is conducive to stabilizing market price fluctuations to a certain extent and promoting the stability of steel prices. The integration of tail-end companies is also conducive to their focus on subdivisions, improving their bargaining power with upstream and downstream, which is conducive to weakening the cyclical nature of the industry and promoting more stable industry and corporate profits.