In May, the price of steel products rose slightly, while the decline in iron ore and coke prices led to a significant decline in steel production costs, which led to a year-on-year increase in smelting and rolling processing industry profits, and the increase was larger than last month. According to the National Bureau of Statistics, from January to May 2018, the ferrous metal smelting and rolling processing industry realized a total profit of 152.64 billion yuan, a year-on-year increase of 114.7%, an increase of 19.3 percentage points over the previous month.
Winning the blue sky defense war plan, the medium and long-term environmental protection will continue to be strict
As of July 7, the first batch of central environmental protection inspectors "look back" six inspectors to inspect in 10 provinces (districts) including Hebei, Inner Mongolia, Heilongjiang, Jiangsu, Jiangxi, Henan, Guangdong, Guangxi, Yunnan, Ningxia The work is all done.
In the medium and long term, the environmental protection of the industry will continue to be strict, and the long-term profitability of environmentally-compliant enterprises will be further guaranteed. On June 11, the Ministry of Eco-Environment began the “Intensive Inspection of the Blue Sky Defence Warâ€. It will dispatch 18,000 people (times) to supervise 4 cities in the “2+26†city, the 11th city of the plain and the Yangtze River Delta region, and will continue until April 28, 2019. Each inspection team on-site inspection for 2 weeks, a total of 21 rounds of supervision.
On July 3, the State Council issued the "Three-Year Action Plan to Win the Blue Sky Defence War". The goal is to reduce the total amount of major air pollutants and reduce greenhouse gas emissions after three years of efforts, and further reduce fine particulate matter (PM2. 5) Concentration, significantly reduce the number of heavy pollution days, and significantly improve the ambient air quality. For the industry, the environmental impact assessment of future new, modified and expanded projects should meet the requirements of regional and planning environmental assessment. It is strictly forbidden to increase production capacity in key areas; strictly implement the implementation method of industrial capacity replacement; increase the elimination of backward production capacity and reduce the excess capacity. Strict implementation of quality, environmental protection, energy consumption, safety and other regulatory standards. Revise the “Guidance Catalogue for Industrial Structure Adjustment†to improve the elimination of excess capacity in key areas.
National and local governments continue to release ultra-low emission programs to help industrial upgrading
In April 2018, Hebei issued the "Ultra-Emission Standards for Industrial Air Pollutants (Draft for Comment)".
In May, the Ministry of Ecology and Environment released the “Working Plan for Enterprise Ultra-low Emissions Reconstruction (Draft for Comment)â€. Clearly require accelerated elimination of outdated production capacity and production facilities that do not meet the relevant mandatory standards. Increase the capacity reduction in key areas, eliminate the sintering machine below 130 square meters, the blast furnace below 1000 cubic meters, the coke oven with a coking chamber height of 4.3 meters or less and an operating life of more than 10 years.
At the beginning of July, Hebei Tangshan released the “Development Plan for Deep Reduction of Coking Super Low Emissions and Coal-fired Power Plantsâ€, requiring that all industries in Tangshan City reach ultra-low emission levels before the end of October 2018, and complete the treatment of wet flue gas de-whitening. Failure to meet the standard implementation of production and remediation.
Recently, Tangshan City proposed the total amount of industry reduction. Tangshan City plans to integrate 30 enterprises within the city by 2020 and reduce it to 25 in 2025. By 2020, Tangshan will completely eliminate blast furnaces of less than 1,000 cubic meters, converters of less than 100 tons and sintering machines of less than 180 square meters, and gradually phase out blast furnaces of less than 1,500 cubic meters and converters of less than 150 tons.
The research center believes that from the state to the key steel producing areas, the exit of backward production capacity will effectively improve the industry supply and demand pattern, promote the prosperity of the industry's profitability and the green development of the industry. In particular, the ultra-low emission reform will start, and the backward production capacity will be withdrawn; and the construction and improvement of environmental protection equipment will help the industry to upgrade.
Steel companies' earnings remained high in July 2018
The high temperature and rainy weather in July will further affect the construction projects, and downstream demand will continue to weaken. At present, although the environmental protection “review†has ended, the environmental supervision work has gradually become normalized. The environmental protection under the blue sky defense is not up to standard or some enterprises have stopped production, which effectively suppresses the release of off-season production.
Especially from the town of Tangshan, in the past few days, the ultra-low emission implementation plan will be released in a few days. The industry will reduce the total target in the next 3-8 years. By the end of November 2018, the ironmaking capacity will be 2.81 million tons and the steelmaking capacity will be 5 million tons. The reduction task will be launched on July 20th for a 43-day mitigation action, which will increase the market's overall expectation of restraint on production and increase market confidence. It seems that the market atmosphere is very similar to the same period last year. It is expected that the market will not be in the off-season in July, but it is necessary to pay attention to the further impact of the uncertainty of Sino-US trade friction on the market.
In terms of raw material costs, domestic coke prices showed a large increase in June, which led to an increase in production costs in July. The research center expects steel companies' earnings to remain at a high level in July.
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