Analysis of China's iron and steel industry

Two ministries jointly put "big" iron and steel production capacity to speed up again

In January 4th, the national development and Reform Commission, the Ministry of industry jointly issued the "notice" on the promotion of matters related to the steel industry supply side structural reforms to use the means of prices, further use of differential power prices, such as the price ladder price means to promote energy saving technological transformation of iron and steel enterprises, accelerate the elimination of backward production capacity. "Notice" clearly, the inclusion of the "catalogue for the guidance of industrial structure adjustment (2011) (Amendment)" iron and steel industry in the restricted category, out of class unit owned enterprises of electricity production continue to implement differential power prices in the current directory, increase sales price or market price basis, which eliminated the standard fare per kWh by 0.3 yuan to 0.5 yuan, restricted the standard fare for 0.1 yuan per kilowatt hour.　　According to the directory, out of class for power frequency and medium frequency induction furnace to steel, carbon steel, stainless steel smelting, 30 tons and below the converter and electric furnace, 400 cubic meters and below blast furnace etc.. West of the Shinkansen senior analyst Qiu Yuecheng said that a significant impact on the future price policy will not, if combined with comprehensive water pricing policy and tax regulation, these enterprises can gradually narrow living space, forced backward production capacity clearing.　　In addition to price means, the supply side of the reform of the administrative means of steel industry has also been considered unprecedented. According to the Ministry of environmental protection on January 1, 2017 bulletin, individual steel companies due to the strict implementation of emission reduction measures are not seriously dealt with. Among them, Jinxi Iron & Steel Group Co. Ltd. Tangshan City Zhengda not according to plan requirements implementation of production, adjusting production time according to the needs of enterprise.　　In addition, according to the steel industry to resolve overcapacity in coal on the deployment and development of rescue work of the inter ministerial joint meeting, Jiangsu Province, after investigation, found a total of "land of steel enterprises 63, the total production capacity of 12 million 330 thousand tons, at present have all remediation in place. GF Securities analyst Li Sha believes that the steel industry to capacity is not only more resolute attitude, more specific planning, punishment is more severe, more specific measures.　　Along with the pace of production capacity, steel prices finally rebounded. Price increases will soon be reflected in corporate profits. Iron and steel industry in 2015 is the loss of the hardest hit, in the year of 2016, with the structural side of the industry and the supply side of the real estate and other downstream demand growth, product prices pick up, part of the steel prices began to profitability. In Maanshan Iron and Steel shares as an example, the company expects 2016 cumulative net profit for profit, the main reason is that the three quarter earnings before the company, is expected in the four quarter of the raw materials, the steel market will remain relatively stable.

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