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The steady growth of "steel demand" in the second quarter
release time:2020-06-02

Since the beginning of this year, domestic steel demand has been greatly suppressed under the influence of the new coronary pneumonia epidemic, but overall, my country's steel demand is still tough. After the steel consumption performance in the first quarter was better than expected, the steel consumption performance in April remained good. The author expects that the steady growth of steel demand in the second quarter will not change.

According to estimates, in the first four months of this year, the apparent consumption of crude steel nationwide reached 302.18 million tons, a year-on-year increase of 2.5%. While the apparent consumption increased steadily, the decline in my country's steel exports continued to narrow. According to data from the General Administration of Customs, in the first four months of this year, my country’s steel exports reached 20.6 million tons, a year-on-year decrease of 11.7%, a decrease of 4.3 percentage points from the previous three months.

The steady growth of steel demand has boosted national steel companies to increase production. According to data from the National Bureau of Statistics, in the first four months of this year, national crude steel production reached 319.46 million tons, an increase of 1.3% year-on-year, of which crude steel output increased by 7.7% in April. The author believes that the national steel companies are actively increasing production. In addition to being driven by consumer demand, they are also affected by the increase in steel prices and the increase in profits of steel products. As my country's national defense epidemic work enters a normal stage, domestic steel demand will further increase in the second quarter.

First, the pressure caused by the epidemic gradually reduced. As of now, there are no provinces in the country that respond to public health emergencies at the first level. The operating rate in various industries has become saturated, and economic life has gradually returned to normal. At the same time, since May, the number of newly diagnosed cases of new coronary pneumonia in Europe has decreased significantly, and many countries have begun to relax the epidemic prevention measures. Accordingly, it is expected that domestic and international steel demand in the second quarter may increase unabated.

Second, the counter-cyclical adjustment effect appears. In the first quarter of this year, in order to hedge the macroeconomic downside risks, governments at all levels have launched a policy "combination punch." After a period of digestion, the policy effect began to show, and the macroeconomic indicators in April showed positive changes. At the same time, downstream industries such as the automobile manufacturing industry also showed a clear recovery trend. In April, the value added of the automobile manufacturing industry ended its downward trend, increasing by 5.8% year-on-year, which was significantly higher than the level in March and the same period last year. In the first four months of this year, the value added of the automobile manufacturing industry fell by 15.0% year-on-year, which was 11 percentage points narrower than the previous three months.

In general, with the introduction and implementation of more vigorous macro policies, the continuous promotion of resumption of production and the effects of various domestic demand expansion policies appear, the demand for steel in the second quarter will continue to grow.

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