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The macroeconomic situation is not optimistic, China steel industry fall into trouble

Since July, the steel market is still in a
difficult situation. Report thanks that not only because of the downturn in
market demand, but also due to various steel companies remained large-scale
production. China’s crude steel produces 1.93 million tons per day in
mid-August, which close to past level of up to 200 tons. From the start of
July, in order to reduce inventory, Baoshan Iron and Steel Group for three
consecutive months will reduce steel prices.

Falling steel prices causes grim situation for
various corporate earnings. The steel
industry group, China Iron and Steel Industry Association vice
president, said in a recent forum, from January
to July this year, China’s iron and steel enterprises profit is only 1.68 yuan per ton. Since the beginning of this year, China’s steel industry has been falling to trouble. Mainly to weak
demand, prices have fallen sharply and decline in the level of profits. August 29, the the
Shanghai rebar contract price fell below 2,400 yuan mark integer, declined more
than two percent lower than year-earlier levels; The first half of the year, the steel
industry realized a total profit fell 49.4%.

China’s iron and
steel industry has a very close relationship with the macroeconomic conditions. The plight of the steel industry from one
side reflects the downturn in the economic development. According to statistics, in July, the
year-on-year growth rate of the gross national exports sharply from 11.3% in
June, shrunk to 1%, nearly 20 percentage points lower than the level of the
same period last year. The major export markets, China’s exports to
Europe in July, down 16% year-on-year, exports to Japan fell by 1%. U.S. export growth
declined sharply from 10.6% in June to 0.6%, just one step away from the
negative growth. Export suffered “frozen” directly drag on industrial production. In July, the
national industrial added value increased by only 9.2% year-on-year to hit the
lowest since May 2009.

At the same time, the growth rate of
investment in fixed assets also has declined. New construction area of the
national housing fells 9.8% in the first seven months, residential new
construction area decreased 13.4%. According to the main economic data in July
estimated that the GDP growth may have “broken 7.” Because constitute
economic indicators of GDP, exports and housing investment accounted for 3
percent of the total. Affected by decrease of two major indicators of growth or
even negative growth, macroeconomic downward pressure is bound to greatly
increase.

 

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