What impact does the current epidemic have on the production of steel enterprises in Hebei? What is the impact on the raw material transportation and production costs of steel companies? Is the impact on the regional steel market sustainable? How do market participants view the operation of the steel market this year?
On January 19th, in an online conference with the theme “North Steel City under the Epidemic” hosted by Lange Steel.com, market participants from many steel companies in Hebei gave detailed answers to the above questions, which attracted Nearly 1,000 people in the industry attended the conference. It can be seen that the impact of the epidemic on Hebei Steel City affects the hearts of many people in the upper and lower reaches of the steel industry chain.
Limited logistics and transportation lead to rising costs
Market participants generally believe that the impact of the epidemic on the transportation side of steel companies is the most intuitive.
“After the outbreak of the epidemic at the beginning of this year, Shijiazhuang and Xingtai, Hebei provinces quickly implemented fully closed urban management, especially all highways in the province were all closed. In the beginning, even local vehicles could not get on the high speed, which caused the transportation of raw materials and finished products. Great influence.” said Tian Yuanyuan, Sales Director of Xingtai Delong Iron & Steel Co., Ltd.
According to him, the company currently adopts road-rail combined transportation for raw materials and has also adopted some measures for the transportation of finished materials to minimize the impact of the epidemic on the transportation of raw materials. It is worth mentioning that the road traffic in Xingtai City is currently recovering in an orderly manner, and the borders of Hebei Province are basically normal.
“Under the dual impact of the epidemic and the cold wave, companies have been affected in transportation and loading and unloading to a certain extent. After automobile transportation is restricted, rail transportation has become the current transportation choice, but there is also a problem of inefficiency.” Chief Marketing Center of Angang Steel Analyst An Yu said, “Recently, shipping, rail, and automobile freight rates have all increased to varying degrees, which has increased the production costs of steel companies.
Especially for steel companies with export operations, after the outbreak, Foreign workers of port cargo ships must “drift” at sea for 14 days before they can enter the wharf, which has greatly affected export shipments. However, starting from January 20, the Bayuquan epidemic has been basically eliminated, and the early impact has been greatly reduced. ”
Compared with other steel companies, Jinan Iron and Steel Group Co., Ltd., whose main sales area is concentrated in Hebei, is more affected by the epidemic. Zhu Jinqiang, the assistant to the company’s president and general manager of the sales company, said that the epidemic has had a greater impact on the transportation of raw materials for enterprises. There have been large-scale shutdowns in many places in Hebei, and overall demand has declined significantly.
In the case that the transportation side is greatly affected, the cost side will rise accordingly.
Tian Yuanyuan said that the limited transportation of raw materials and increased logistics costs have led to the continuous increase in production costs of enterprises. “Compared to the transportation side, I think the epidemic has a greater impact on the production costs of steel companies, but this can bring a certain cost support to steel prices.” He emphasized.
Anshan Iron and Steel Co., Ltd. has a high proportion of its own mines, low dependence on foreign mines, some long-term association mines, and fewer raw materials. Therefore, the impact of the epidemic on its cost is not significant. However, An Yu still reminds market participants to prepare for rising costs: “This is a reality that we must face now, especially now that Australian coal imports are basically stopped, and companies still need to find domestic high-quality coal.”
In addition, the epidemic has also affected the maintenance of steel mills and “winter storage”, but orders from steel companies are generally saturated.
Regarding the maintenance of steel mills, An Yu said: “Affected by the epidemic last year, foreign technical experts were unable to enter the country and can only guide the company’s maintenance online. This year, the company’s maintenance plan may still be delayed by the epidemic.”
In terms of orders, An Yu said that Ansteel’s orders were saturated in February this year, and production arrangements were relatively full. Zhu Jinqiang said that the same is true for Jinan Iron and Steel Group Co., Ltd. The sales of finished products are not a problem and the agreements are basically full.
In terms of “winter storage”, Zhu Jinqiang believes that steel prices have risen sharply at the end of last year, and the average price of mainstream steel products has reached more than 4,000 yuan/ton, which has led to lower enthusiasm for traders to obtain goods. However, many steel companies take the initiative to take the goods for “winter storage”, especially those in the Northeast region.
The steel market this year is still worth looking forward to
Whether it is from a macro perspective or market fundamentals, market participants generally believe that this year’s steel market is still worth looking forward to.
Chen Kexiao, General Manager of the Medium Plate Division of Hebei Puyang Iron and Steel Co., Ltd., said that the impact of the epidemic on the steel market at the beginning of this year and the beginning of last year is sudden. The difference is that the epidemic that broke out last year has a wide range and a long time.
As a result, steel resources are nowhere to be sold and inventory pressure is greater. The outbreak this year was mainly concentrated in individual provinces, and its impact on the steel market was weaker than last year. In the short term, the trend of the steel market will be weak, but in the long term, the steel market is still worth looking forward to.
“With last year’s anti-epidemic experience, I believe this year’s epidemic will be brought under control soon.” Zhu Jinqiang is also optimistic about the market outlook.
Market participants such as An Yu and Tian Yuanyuan believe that steel prices may be adjusted before the Spring Festival. However, under the support of cost, the callback range is limited.
At the same time, considering that the overall demand of downstream industries such as home appliances and automobiles has performed well, the downstream operating rate will increase significantly after the Spring Festival, and the demand for replenishment will be superimposed. The future trend of the steel market is still optimistic. It is not ruled out that steel prices may go out of the rising market after the Spring Festival.
Taking the home appliance industry as an example, data from the National Bureau of Statistics show that in 2020, the total retail sales of household appliances and audio-visual equipment in my country will reach 857.1 billion yuan, a year-on-year decrease of 3.8%.
The total retail sales in December 2020 will reach 100.9 billion yuan, an increase of 11.2% year-on-year. . Market participants believe that in 2021, as the country implements the strategy of expanding domestic demand and promoting home appliances “replacement of old for new” policy dividends will continue to be released, the home appliance industry will continue to rise, and the resilience of steel demand will continue to increase.