Current situation and future of the hottest steel

The current situation and future of Xinjiang's steel industry

the first "national counterpart support work conference for Xinjiang" was held in 2010, which opened the curtain for all parties to assist in the construction of Xinjiang, and Xinjiang steel plants, including Bayi Steel, began large-scale production one after another. The crude steel production capacity in Xinjiang expanded rapidly from 10.1 million tons in 2010 to 25.3 million tons in 2015. In 2013, the blast furnace capacity put into operation in Xinjiang was close to 7million tons. By the end of 2013, there were 22.7 million tons of blast furnace capacity in Xinjiang, mainly projects planned to be put into operation annually, including three categories:

1, Bayi Iron and steel, Xinxing cast pipe and other large steel plant expansion projects

2. Xinjiang Construction Corps expansion project

3. Special steel items

as of 2015, there were about 140 iron and steel enterprises in Xinjiang, with a total iron and steel production capacity of 25.3 million tons, of which 12.2 million tons were distributed in and around Urumqi, 4.2 million tons in other regions in Northern Xinjiang, 7.2 million tons in southern Xinjiang and 1.7 million tons in eastern Xinjiang. The substantial expansion of production capacity led to a serious mismatch between supply growth and demand growth, and the utilization rate of production capacity began to fall sharply. The utilization rate of crude steel production capacity in Xinjiang decreased from 80% in 2010 to 50% in 2013; In, Xinjiang steel started the instrument and automatically stopped the expansion of iron production capacity after 500 or 1000 revolutions. Affected by the slowdown of domestic macroeconomic growth, the overall utilization rate of the steel industry fell, further reducing the utilization rate of crude steel production capacity in Xinjiang to a low level of 29%

the overcapacity reduction superimposed on the attack on "ditiao steel", and the contradiction between supply and demand in the market in Xinjiang has been alleviated. In 2016, the government began to actively promote the supply side reform of industries with overcapacity. The 13th five year plan of Xinjiang iron and steel industry proposes to eliminate 6.85 million tons of excess capacity, reduce the number of small and medium-sized iron and steel enterprises, and improve industrial concentration, so that the production capacity of the top three iron and steel enterprises in the region accounts for more than 90% of the total steel production capacity

the 13th five year plan target of Xinjiang iron and steel industry

10million tons in Wuchang area, with Baosteel Group No. 8 steel company as the core and high-quality steel products as the main

3million tons in Northern Xinjiang, with ILI as the core, accelerate the integration, and focus on building materials

4million tons in southern Xinjiang, make full use of the mineral and coke resources of the local and surrounding countries, and give full play to the advantages of large enterprises

eastern Xinjiang has 1million tons, making full use of iron ore resources and accelerating upstream and downstream industrial chain cooperation

Xinjiang has a total of 18million tons, resolving 7million tons of excess capacity

in 2016, 900000 tons of capacity reduction task was formulated in Xinjiang, including four enterprises in Ili, Changji and Kashgar. By the end of September 2016, the smelting equipment demolition of four enterprises in the task had been completed, and the 900000 tons of capacity reduction task had been completed. While reducing production capacity, new steel production capacity is strictly limited. The "13th five year plan" of Xinjiang's iron and steel industry proposes that Xinjiang will strictly implement the national industrial policies, strictly control the total iron and steel production capacity, and shall not approve or record the construction of new production capacity projects in any name or in any way, and shall not expand the project production capacity in the form of technological transformation

in addition to the above statistical internal capacity, there are also a large number of non statistical medium frequency furnace enterprises in Xinjiang. There are 17 ground steel enterprises in Xinjiang, 117 medium frequency furnaces of 1.5-50 tons, and the capacity of medium frequency furnaces is 4million tons. Most of these enterprises' production capacity is unqualified, and they have serious problems in environmental protection and safety. Due to the low scrap price and electricity cost in Xinjiang, the production cost of medium frequency furnace enterprises is extremely low, which makes the Xinjiang steel market, which is already in a prominent contradiction between supply and demand, more chaotic. In 2017, the state began to ban "ground bar steel" and medium frequency furnaces, and required to ban medium frequency furnaces comprehensively by June 30. A large number of medium frequency furnace enterprises began to withdraw from production. During the inspection of the national inspection and feedback meeting on May 21, the leaders of Xinjiang Autonomous Region introduced that all the "ground bar steel" enterprises in the region had stopped production. The production capacity of the ground bar steel enterprises that have stopped production is about 4million tons. According to the capacity utilization rate of 50%, the annual output outside the statistics is about 2million tons

it is understood that some local private small steel enterprises in Xinjiang have undergone large-scale market clearing under the continuous downturn of the industry, and this part cannot be reflected by statistical data. In addition, due to the poor security environment, a large amount of production capacity in Xinjiang is actually unable to start, including Nanjiang iron and steel, which originally belonged to Bayi Iron and steel, and Jinte iron and steel of Xinxing Jihua Group. At present, the State prohibits new production capacity without reduction and replacement, and it is expected that the subsequent steel production capacity in Xinjiang will enter the downward channel. In 2017, 5.7 million tons of steel were completed, and there is still room for some capacity reduction in Xinjiang in 2018; The 13th five year plan of Xinjiang iron and steel industry stipulates to reduce the production capacity by 7million tons, reaching the total amount control target of 18million tons. Considering that some of the removed capacity is not in production, it is conservatively estimated that the steel production capacity of Xinjiang in 2017 and 2018 will be 21.7 million tons and 20.5 million tons respectively. Under the joint efforts of the government and the market, the overcapacity pattern of Xinjiang steel shows a trend of improvement year by year

the fixed asset investment in Xinjiang increased by 15% in 2018. The government work report of Xinjiang in 2018 made it clear that the fixed asset investment in Xinjiang increased by 15%. On January 22, 2018, the two sessions of the Xinjiang autonomous region were held. At the meeting, the chairman of the autonomous region, xuekelaitizarker, pointed out in the government work report that the Xinjiang autonomous region has completed the total investment in fixed assets of the whole society in five years. In order to promote the continuous healthy and orderly development of the polyurethane insulation industry, trillion yuan has been completed, with an average annual growth of 13.5%, of which the infrastructure investment has completed 1.94 trillion yuan, with an average annual growth of 27.5%; In 2017, the actual investment in fixed assets was 1.18 trillion yuan, an increase of 20% year-on-year. At the same time, it was proposed that the investment in fixed assets of the whole society will increase by about 15% in 2018. According to the expected growth target of 15% in 18 years, the investment in fixed assets in Xinjiang will reach 1356.5 billion yuan. Xinjiang has backward infrastructure construction and high demand for fixed asset investment. The fixed asset investment in Xinjiang during the 13th Five Year Plan period is significantly different from that during the aid period. During the construction assistance period, Xinjiang launched a large number of industrial capacity such as steel and cement, resulting in serious overcapacity in the region. During the "13th five year plan" period, the field of fixed asset investment is more clear, focusing on weak infrastructure fields such as roads, railways and informatization. Taking railways and highways as an example, as of 2015, the railway operating mileage per square kilometer in Xinjiang was 35.3 kilometers, only 28% of the national average; High performance, high stability, value-added, experimental machines are available in Jinan new era Gold Testing Instrument Co., Ltd. the road mileage per square kilometer is 0.11 kilometers, only 23% of the national average. On average, Xinjiang's infrastructure is still relatively backward, and the demand for fixed asset investment is still high. In 2018, the growth rate of fixed asset investment in Xinjiang was higher than the national average, and the structure will be dominated by infrastructure construction. In terms of scale, Xinjiang's fixed asset investment increased by 20% and 15% year-on-year in 2017 and 2018, respectively, significantly higher than the national level in the same period. In terms of structure, in 2017, Xinjiang made it clear that the investment in fixed assets will focus on infrastructure construction, and strive to complete the investment of 200 billion yuan in highway construction, 34.7 billion yuan in railway construction, 14.35 billion yuan in airport construction, 300000 herdsmen's benefit houses and 298000 urban security houses. The 2018 government work report of the two sessions clearly pointed out that in the past five years, Xinjiang's fixed asset investment has increased by an average of 13.5%, and infrastructure investment has increased by 27.5%. Although the direction of fixed asset investment has not been clearly announced at present, from the past direction of fixed asset investment in Xinjiang and the actual situation in Xinjiang, it is expected that Xinjiang's fixed asset investment in 2018 will still be dominated by infrastructure construction

the competition pattern in Xinjiang has improved. Iron and steel enterprises in Xinjiang are generally small in scale, and their production capacity is mainly construction rods and wires. The building materials of Xinjiang steel market are mainly supplied by enterprises such as Bagang, Da'an, Kunyu, Jiuquan Iron and steel, Kunlun, Xinxing and Jinte, and the plates are mainly supplied by Bagang and Jiuquan Iron and steel. The competition pattern of Xinjiang steel market has been significantly optimized due to the combination of de industrialization and de capacity of ground steel. At present, the steel mills in Xinjiang are relatively concentrated, and a competition pattern of approximate oligopoly led by Ba steel has been formed. The vicious competition has been greatly reduced, and the willingness to basically set production by sales and jointly limit production and ensure prices is relatively strong. The leading steel enterprises have fully benefited from the improvement of the competition pattern and the recovery of prosperity

the "the Belt and Road" supports fixed asset investment in Xinjiang. In May 2017, the "the Belt and Road" International Cooperation Summit Forum was held in Beijing. The 19th CPC National Congress included the "the Belt and Road" into the party constitution, and the follow-up "the Belt and Road" will continue to deepen. In the 13th five year plan, Xinjiang will take the new Eurasian Continental Bridge Economic Corridor and the China Central Asia West Asia economic corridor as the links, and focus on the strategic objectives of the core area of the Silk Road Economic Belt to carry out the construction of three bases, three channels, five centers, and ten import and export industrial clusters. The "the Belt and Road" strategy will be a major policy dividend for China in the next decade, and the large-scale infrastructure construction, resource and energy development and utilization, and urbanization development in Xinjiang during the 13th five year plan will usher in new historical opportunities. With the continuous deepening of the "the Belt and Road" strategy, Xinjiang will achieve great development as the bridgehead of the "the Belt and Road" in the future. In particular, after the change of the new government in Xinjiang, it has proposed to "grasp both economy and stability maintenance", paying attention to the important role of economy in prospering and maintaining stability in Xinjiang. As a large region accounting for 1/6 of China's land area, the transfer of industries and population to Xinjiang will become a probable event in the future, which puts forward higher requirements for Xinjiang's infrastructure construction. The sustainable growth trend of Xinjiang's fixed asset investment in the next few years is relatively clear

at the same time, the "the Belt and Road" project is expected to further boost steel demand. There are three channels on the "the Belt and Road" starting from Xinjiang, namely, the new Eurasian road and bridge economic belt, the central and Western Asia economic corridor and the China Pakistan Economic Corridor. The new Eurasian road and bridge economic belt connects Kazakhstan and its central Asia, West Asia, central and Eastern Europe through Xinjiang to the West; The central and Western Asia economic corridor starts from Xinjiang and arrives at the Persian Gulf, the Mediterranean coast and the Arabian Peninsula, mainly involving five Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan), Iran, Turkey and other countries; The China Pakistan Economic Corridor mainly involves China and Pakistan. In 2016, China's total foreign trade with East Light Companies in West Asia, Central Asia and central and Eastern European countries along the "the Belt and Road" aimed at the medium and high-end markets and emerging fields reached US $328.2 billion, including US $127.2 billion in imports and US $2010 billion in exports. From the statistical data, the main export place of China's steel is in Southeast Asia, while the export to Central Asia is mainly shoes and clothing, and the export to Eastern Europe is mainly mechanical and electrical products. China's steel exports to Central Asia and Eastern Europe are less than US $1billion. However, we believe that the low base in the early stage may mean higher demand elasticity in the future. After sorting out the implementation projects of the the Belt and Road so far, we found that China's implementation projects in central and Western Asia are mainly transportation facilities construction (railway, highway, subway), and the demand for steel is expected to increase rapidly in the future. As a large steel enterprise with the most geographical advantages in China, the company's steel sales are expected to benefit from the continuous deepening of China's "the Belt and Road"