The Current Situation in the Steel Market

The symbolic year in the steel market is in 2017. The world economic recovery will continue to consolidate in 2018, the prospect of the world market is optimistic. IMF will increase the global output up to 3.7% according to the newly released The World Economic Outlook Report in January, 2018, it increased 0.1 percent point compare with the predicting of The World Economic Outlook Report in October, 2017, and increased 0.5 percent point comparing with 2016. These are indicate the good basics of economic recovery.

As for 2018, with the constant implement of deepening the structural reform and the principle of ‘‘three eliminations, one reduction, one supplement’’. China’s economy will be further accelerated in terms of structural optimization, the old and new drivers of growth transformation, and the quality of development. According to the information released by China iron and steel industry association, the operation quality and efficiency of the steel industry have been greatly improved in the first three quarters of this year, with a total profit of 22.9963 billion yuan, up 86.01% year on year.

According to the production, in the first three quarters, the total production of iron, crude steel and steel in China is 0.579 billion, 0.699 billion and 0.821 billion respectively. The steel industry is a typical cost addition type industry, its profit is not necessarily related with the price of raw material. The real test proves that the tradition cannot explain the essence of business operation. The raising profits of investment scale business can realize through marginal cost or optimal cost to change the relative location of costing carve.

In view of the domestic situation, the 19th CPC national congress was successfully held, and the direction of economic reform and development was further defined: quality and efficiency first; supply-side structural reform as the main line; quality reform, efficiency reform and power reform of economic development should be promoted, and total factor productivity should be improved.

Firstly, the traditional ”troika” will continue to drive economic steady growth. Secondly, the supply-side structural reform further improve the quality of economic development. And China’s steel market is mainly to meet domestic demand. Although the external demand environment has been improved, due to frequent international trade frictions under the trend of anti-globalization, although the steel export situation can be improved, which has limited effect on promoting the growth of China’s steel demand.

At the same time, with the domestic economic restructuring and transformation, the continuous deepening of supply-side structural reform in the downstream industry will bring about changes in the steel market demand. In the past, the attention to the growth of demand scale will gradually turn to the attention to the changes in the demand structure, which will lead to major adjustments in the development strategy and competition strategy of steel enterprises. A new round of export tariff adjustment comes into effect on January, 2018. And with canceling the export tariff of the steel, the future situation of steel export will be improved.

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