Overview of 2012 China's steel market forecast report (spring report)
although the domestic and foreign macroeconomic situation in 2012 was complex and changeable, at present, the main indicators of the steel market basically met our 2011 forecast, which also brought a greater market bottom for the consumer enterprises of instruments. Therefore, on the whole, we continue to maintain the main views of the 2012 annual report on China's steel market at the end of last year, and only slightly revise some indicators. The following is only a general description of the steel price and crude steel output. See our quarterly report series for the prediction of other important indicators
the steel price trend in the first quarter of 2012 is consistent with the prediction, and our prediction for the whole year remains unchanged. In the previous report, we believe that the steel price will show a pattern of "bottoming first and then rising" during the period from the end of 2011 to the first quarter of 2012. The starting time of the recovery is at the end of February and the beginning of March, and the actual trend of the domestic steel market is generally consistent with this. For the prediction of steel price operation this year, we believe that it will be a slow recovery process, during which there may be repetition, but the overall trend will be "low before high"
chart 1 Comparison between the actual trend of steel price in year 1 and the predicted trend of steel price in 2012
as the government's recent target for this year's economic growth is lower than the forecast value we gave in the fourth quarter of last year, it will make it difficult for the domestic steel output to reach the forecast value in the previous period, so the forecast value of the annual crude steel output has been moderately lowered this time. In the previous report, we predicted that China's GDP growth target in 2012 would remain unchanged at 8% (predicted that the actual GDP growth would be 8.6%), and based on this, we made the annual crude steel output forecast. However, in this year's government work report, Premier Wen Jiabao lowered the expected target of economic growth to 7.5% (the actual growth of more than 8% can still be expected, but it may be slightly lower than the predicted value). Therefore, we reduced the annual crude steel output from 730million tons to 710million tons
the overall recovery of the global economy is divided, and it is unlikely that the economy will double bottom. The U.S. economy continued to recover, consumption and employment improved, and the manufacturing sector performed better than expected. In order to avoid another economic downturn, the Federal Reserve may still launch further easing policies in the future. The euro zone economy continues to decline, and the debt crisis situation is still grim. The economic growth of the preferred packaging for new products from emerging economies slowed down. Since 2012, the economic growth of major emerging economies has continued to slow down, and exports have fallen sharply. The exports of South Korea and Taiwan, China are not optimistic, and the easing of monetary policy in the later period may be further increased
China's economy is expected to get out of the situation of low in the first half and high in the latter. In the first half of the year, under the influence of the European debt crisis and the slowdown in domestic demand, the economy further declined. In the second half of the year, with the gradual relaxation of monetary policy and the support of investment in affordable housing, water conservancy facilities and strategic emerging industries, the economy may gradually rebound. This year is the first year of the change of the local government. The investment impulse is still there. The local economy may have a different mood at the moment: the venue is full of customers in the industrial chain who will perform well in their eager inquiry. Against the background of the current slowdown in domestic and foreign demand, investment may still be the main driving force for economic growth in 2012. There will be no substantive shift in monetary policy in 2012, and the maintenance of aggregate stability, targeted easing and structural fine-tuning will be the main contents
chart 2 forecast of China's main economic indicators in 2012
production capacity growth slowed down, investment in various regions of the country was uneven, and the capacity expansion of private steel enterprises accelerated. It is estimated that in 2012, about 40million tons of iron making capacity will be added, and the total steel-making capacity will reach 8 700million tons. According to the statistical data of Mysteel, 63 new blast furnaces were installed in China in 2011, with a total iron making capacity of 85.59 million tons. Among them, only Tangshan, a key region, added 12 new blast furnaces, with a total iron making capacity of 15.5 million tons. According to the latest statistics, China is expected to have at least 34 new furnaces in 2012, with a total iron making capacity of 40.12 million tons
it is estimated that the global crude steel output in 2012 will be 1.58 billion tons, with a year-on-year increase of 4%. Growth will be driven primarily by a clearer economic outlook for emerging economies and the United States. Major steel producing countries are cautious about the global steel market situation in 2012. South Korea's crude steel output will increase by 27% over 2011, reaching the level of 69.2 million tons. Due to the substantial increase in supply and weak domestic demand, the Korea Steel Association predicts that the Korean steel enterprises will concentrate on capturing the foreign market, and the steel export volume is expected to achieve a higher growth. The growth target of Vietnam's iron and steel industry, a representative of emerging markets, was only% in 2012 (with an average annual growth rate of more than 20% at the peak of the annual growth period), mainly because there were few positive factors in the overall economic situation and the iron and steel industry in 2011 and 2012 compared with previous years
the downstream demand is difficult to be optimistic in the short term and may gradually improve in the medium term. The growth rate of fixed asset investment has slowed down in regulation and expectation, and the growth rate in the central and western regions is much higher than that in the eastern region. Local governments generally lowered the growth target of fixed investment in 2012, but on the whole, it is still at a high level. Specifically, the growth target of the eastern region is relatively low, and the central and western regions are still the main engines for the growth of fixed investment. The national average growth rate is about%
there is a large space for the growth of water conservancy investment. It has long lagged behind the growth rate of GDP, and the proportion of fixed asset investment in water conservancy construction in GDP is very low. According to the calculation of 341.2 billion yuan of fixed investment in water conservancy in 2011, it accounts for less than 0.8% of GDP in that year. Railway investment is still in the process of correcting the excessive growth in the early stage. The investment in railway capital construction is regarded as a wind vane for the change of railway construction scale. In 2012, the Ministry of Railways arranged a fixed asset investment of 500billion yuan, including 400billion yuan for capital construction, a slight decrease compared with 469billion yuan in 2011. The real estate industry has entered a cold winter, and there is no sign of improvement in the short term. From the main indicators of monitoring the real estate industry, the industry prosperity, the construction entrepreneur confidence index, the LCD experiment time and the real estate entrepreneur confidence index have declined for four consecutive quarters, and the growth rates of the purchased land area and the newly started area are all falling back. (see the 2012 spring report for details of other industries)
Figure 3 downstream demand forecast (see the spring report for details)
in 2012, the global demand for iron ore will continue to grow, the supply and demand of iron ore will remain basically balanced, and the supply is slightly greater than the demand. China's economic situation has slowed down and the growth rate of demand has slowed down. The international coking coal market is oversupplied, and the downstream demand is relatively weak. Affected by the falling price of Imported Coking Coal and weak downstream demand, the domestic coking coal market may go out of the pattern of "bottom first and then recovery", and the price is still strong on the whole. Coke will still be "squeezed at both ends"
based on the above, our previous judgment on the main operating indicators of the iron and steel industry remained basically unchanged. In terms of steel price prediction, we believe that with the weather improving, downstream demand is gradually opening up, steel mills and traders are more willing to pull up, the market is more optimistic, and the price of raw materials is relatively stable. It is expected that the rising momentum starting in February this year is expected to continue, and may reach the peak in the first half of the year at the end of May and early June