The hottest global steel demand is hard to improve

Global steel demand is hard to improve

the global steel industry continues to be squeezed by macro and industrial demand, and the overall industry overcapacity situation is difficult to make a substantial change in the short term. The solvency of global steel enterprises is under pressure to varying degrees. The credit risk exposure of small and medium-sized steel enterprises in areas with economic downturn or even recession is more significant, and the overall credit quality of the industry is hard to say to have a substantial improvement

limited demand growth

the steel industry is based on homogeneous product competition and is demand driven. After the subprime mortgage crisis, stimulated by the large-scale quantitative easing monetary policy of major developed countries, the global economy experienced a short rebound, but it has been in the downward channel since then, indicating that the downturn in global macro demand is difficult to reverse in a short time. After several years of upward growth, the global economic growth rate in 2016 fell again to the same level as that in 2012, reflecting the vulnerability and repeatability of global economic growth

given that the economic growth rate of major global economies has increased since 2017, it is expected that in the short term, the global economic growth rate will finish bottoming out and slowly rebound from the bottom. In the medium and long term, as major countries promote economic structural reform, and under the background of innovative changes in various factors of production, the global economy is expected to stabilize at a new balanced growth point. The sluggish global macro demand will directly affect the investment and consumption demand of the downstream steel industry, and eventually lead to the synchronous contraction of the operating income and profit space of steel enterprises

steel is mainly divided into crude steel and special steel, of which crude steel is mainly used in infrastructure and real estate construction, oil and gas pipeline construction, and special steel is mainly used in automobile, machinery, household appliances and other industries

in the field of infrastructure construction, the global fixed asset investment continues to shrink, and insufficient investment will restrict future economic growth. Since 2011, the growth rate of global fixed asset investment has fallen sharply, reflecting the sluggish global macro demand, which has seriously affected investor confidence. Especially in recent years, the sluggish economic growth of developing countries is difficult to meet their huge demand for fixed asset investment. The continued sluggish investment demand will reduce the competitiveness of regional enterprises and ultimately restrict their future economic growth

in the field of real estate construction, the growth rate of demand in major countries in the world has been differentiated. In East Asia and the Pacific, the growth rate of real estate development and construction investment in China and Japan is basically hovering on the edge of zero growth; In Europe, the year-on-year growth rate of new housing starts in the UK has slowed down, the year-on-year growth rate of quarterly adjusted construction output in Germany has hovered at the edge of zero growth, and the calculation formula of partial load obtained by the Italian house price index has shrunk year-on-year for many consecutive years. In the medium and long term, the demand for housing construction in East Asia and the Pacific will continue to be depressed due to economic transformation or structural problems

global infrastructure investment is basically in a state of contraction, real estate and construction investment (except for North America and Southeast Asia) is basically hovering on the edge of zero growth, while the growth of global automobile production basically follows China's production, and will maintain a normal low-speed growth in the future. It can be seen that under the background of the continuous bottoming of the global economy and the sluggish investment in fixed assets with practical implementation of the use value ball, it is difficult to be optimistic about the growth prospects of investment or output in the main steel industry. To sum up, whether from the perspective of macro demand or industry demand, the demand growth space of the global steel industry in the future is very limited, which can achieve low-speed growth in an optimistic situation, and even shrink in a pessimistic situation. This means that in the future, the operating income growth space of global steel enterprises is limited, and the profit growth prospect is not optimistic. When facing high leverage operation, the risk of deterioration of solvency is high

the supply and demand fundamentals are difficult to improve in the short term.

the growth rate of global crude steel production continues to be sluggish, and the supply and demand fundamentals are difficult to be effectively improved. In recent years, the growth rate of global crude steel production has basically decreased year by year, and even contracted by 2.96% year-on-year in 2015. In 2016, the shrinking trend began to reverse, and the output was basically stable. Given that China's crude steel output is close to half of the global output, the supply and demand Bureau of China's steel industry faces a significant global impact. In the second half of 2016, as the Chinese government strictly implemented the capacity reduction policy, steel prices rose sharply, directly driving the demand of surrounding regions and upstream and downstream industries. However, in view of the fact that this round of steel price rise is caused by the contraction of the supply side guided by the policy, and there is no substantial improvement in the macro and industry demand side, this round of steel price rise is more a positive effect of overdraft future policies. It is expected that in the short term, the overcapacity situation in the global steel industry will be difficult to improve, the global steel enterprises will face the difficult situation of reducing production capacity or reducing production, and the growth space of operating income and profit is very limited

in terms of regions, Asia, as the world's main steel production and marketing place, accounted for about 70% of the world's total output of crude steel in 2016, and the apparent consumption of crude steel accounted for about 64% of the world's total consumption. In recent years, the growth rate of its crude steel production has declined significantly, and even contracted year-on-year in 2014, which can only barely maintain the growth trend. EU crude steel output has only increased in 2014 since 2011. In recent years, the overall economy of the EU has maintained a growth trend, which is also 7. 5% of the apparent consumption of crude steel Some experimental machines are equipped with a ball seat that is self-aligning and not easy to disassemble, which is one of the few regions in the world. Crude steel production in North America shrank by 8.38% year-on-year in 2014, and the apparent consumption of crude steel in the region also shrank by 8.22% year-on-year. Although real estate and construction investment and automobile production in North America have maintained a growth trend in recent years, the oil and gas industry, as the main steel industry in North America, has continued to be depressed, resulting in a sharp decline in steel pipe demand

under the growth rate of global major steel enterprises' output 4. Slide when pressing and holding the power switch of switching power supply

under the background that the global steel industry is facing the double shrinkage of macro demand and industrial demand, the solvency of global major steel enterprises is under pressure to varying degrees. Generally speaking, the macro demand fluctuation risk is regional and overall. Steel enterprises mainly deal with it through cross regional layout, while the industry demand fluctuation risk has upstream and downstream conductivity. Steel enterprises mostly deal with it through the cross industry layout of product categories. Therefore, large iron and steel enterprises with cross regional layout can fully mitigate the macro and industrial demand fluctuations, the output is basically stable, and the solvency is relatively stable

ArcelorMittal, the world's largest steel enterprise, continued to shrink its crude steel output from 2015 to 2016. However, due to the cross regional distribution of production capacity in Europe and the United States and the high value-added product structure, its overall output fluctuation trend is much smaller than that of the global output, and its solvency remains stable. Regional small and medium-sized iron and steel enterprises are generally greatly affected by regional macro and industrial demand, with low product added value and large output fluctuation trend, which is not conducive to maintaining the stability of solvency. At the same time, small and medium-sized steel enterprises in areas with insufficient steel supply will usually face the impact of imported cheap steel, the risk of production and operation fluctuations is more significant, and the risk of deterioration of solvency is greater