Favorable factors began to show, the depressed state of the steel industry is expected to improve

Recently, trillion project of the country has
been approved, the demand of the steel industry could increase. Whether the
steel industry can finish a long-term downturn? This also is unknown.

“The first seven months of this year, 13
industry of production in 21 major steel manufacturing industry decline year-on-year,
manufacturing steel particularly in the doldrums.” September 7 to 9, in
2012 China’s first construction steel industrial chain of high-end forum, the
director of the Metallurgical Industry Economic Development Research Center
said so.

Since the beginning of this year, the
market situation of the iron and steel industry is facing increasingly severe,
prices continue to be in shock downstream channel, the whole industry is almost
in a comprehensive loss for the state. Downstream industries of steel demand continued
weak, excess capacity is the root cause of the downturn in the steel industry. For
example, as the large consumption of steel construction steel industry, railway
construction continued in the “winter” period, the real estate investment
continued to slow down limit the construction steel market rebound.

However, experts believe that the fourth
quarter, this situation expects to improve. Environment from the macro point of
view, the policy in the second quarter has bottomed out, which is entering the
relaxation cycle, the current round of policy cycle is a moderate, gradual way
to expand. The external environment also improved, the economy bottomed out
from exports began to improve in the fourth quarter, and international capital
outflow from China phenomenon ’18 ‘is expected to change. Macroeconomic
Research Institute of National Development and Reform Commission said.

Some experts also believe that the
stability of investment in the second half of the year is an important measure
to expand domestic demand and steady growth, The government will increase
funding support for national key construction projects such as water
conservancy, railway, and actively and steadily promote urbanization.

Downstream industries also have a good expect
for the second half of the year situation. A representative of the construction
enterprises believe that the second half of this year, the domestic economy and
the overall situation will be better in the first half of the year, the trend
will slow the accelerated decline in infrastructure investment, it may be a
slow recovery after bottoming out. This will bring good demand for construction

However, according to statistics, in 2012, domestic
steel consumption of growth in the range of 8.4-18.6%, lower than the 19.17
percent in 2011, a huge steel production capacity to suppress the formation of
long-term price.

In this regard, the principal analyst pose
that in the long term, demand space for steel still have confidence; in medium
term, difficult temper of the steel industry to be unbiased; while from now to
see the bottom of the steel industry running to be patient.


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