China's crude steel production continues to grow next year

In 2017, with demand, the output of crude steel and steels in China showed an increasing trend, which was basically in line with previous expectations. Statistics show that the 1-September cumulative, the national crude steel production of 638.73 million tons, year-on-year growth of 6.3%, compared with the same period last year to increase the growth of 5.9%, the national output of 829.86 million tons, year-on-year growth of 1.2%, growth rate with the same period last year. It is expected that the annual growth in crude and steel production will not change.

Looking ahead to 2018, China's steel production situation is expected to be around 877 million tons of crude steel production, about 3% growth, the national output of about 1.12 billion tons, about 1%. That is to say, China will continue to grow in the new year, and there will still be no reduction.

In 2018, the production of crude and steel in China continued to increase, the first factor of course is domestic consumption continued to increase, although its growth rate fell sharply. China's crude steel apparent consumption is estimated to be around 850 million tonnes in 2018, with a growth rate of about 8%. There will be a demand for production, a new year of increased domestic demand, of course, to provide steel enterprises to increase space.

Second, steel exports are likely to rebound. Steel exports (directly exported, below) have always been an important part of China's total demand for steel. According to preliminary calculations, the National Steel export volume is expected to reach 80 million tonnes in 2018, up about 3% from the previous year. China's steel exports have resumed growth, which is bound to require a rise in domestic steel production.

The third factor is a strong rise in market sales prices, doubling production profits. According to statistics, this 1-September, the national scale of industrial enterprises to achieve a total profit of 5.5846 trillion yuan, year-on-year growth of 22.8%, including ferrous metal smelting and calendering processing industry to achieve a profit growth of 1.2 times times, at present some steel varieties per ton of profit has exceeded thousand yuan. Even if China's steel prices fell back in 2018, steel production is still profitable, tons of steel profits will not change, but also because the competition between peers more intense, even if the profit is reduced to seize market share. All these, will certainly improve the steel enterprises to increase production enthusiasm.

China's crude steel production continues to grow, leading to a swelling demand for high-grade iron ore, which is also good news for the international iron ore market. According to the General Administration of Customs statistics, 2017 1-September, the national import iron ore 817 million tons, year-on-year growth of 7.1%. The national iron ore imports are expected to close to 1.1 billion tonnes in 2017, while the national iron ore imports in 2018 are likely to break through the 1.1 billion-ton integer pass.

For a period of time, the high profile of steel to excess capacity and ban "steel" will not weaken the domestic steel production growth momentum. As long as China's aggregate demand for steel is not reduced, the growth of Chinese steel companies will continue. Of course, the removal of backward production capacity, especially the total and complete elimination of "steel", will inevitably open up a new space for the release of advanced production capacity, will also make the previously occupied by the backward capacity of the part of the "underground production", that is not included in the actual production of statistics, surface. Based on this estimate, China's steel capacity utilization has more than 80%, many steel enterprises capacity has been fully loaded production. With the further growth of crude steel and steel production in the new Year, the utilization rate will increase.

It should be pointed out that, despite the continued increase in Chinese crude and steel production in the new Year, output growth will decline. The country's crude steel production is expected to grow by about 3% in 2018, up more than 3 percentage points from a year earlier.

One of the uncertainties affecting the output of Chinese crude steel and steels in 2018 is the continued capacity and "iron fist" environmental protection. If the capacity task can be truly completed, such as "steel" to be fully and completely banned, and will not be revived, while the "Iron Fist" environmental protection will be behind the basic extinction of production capacity, the growth of the above-mentioned commodities production will be more moderate, otherwise its output growth will exceed expectations.