PMI's two consecutive rises in funds may become a

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PMI rising funds for two consecutive days may hinder the recovery of the steel industry

the recovery of PMI in the steel industry, although it indicates the improvement of the situation of the industry. However, as a heavy asset industry, the tightening of capital situation may accelerate the reform of the industry. After falling to a seven-year low in November 2015, the purchasing managers' index of the steel industry (hereinafter referred to as the steel industry PMI), which reflects the prosperity of the industry, ushered in two consecutive rises at the turn of 2015 and 2016

on February 1, the high precision industry committee of China IOT steel logistics released the latest index. The steel PMI in January 2016 continued the recovery momentum of last month, 46.7%, up 6.1 percentage points from the previous month, the highest value in nearly nine months. However, it is still below the 50% boom and bust line, indicating that the prosperity of the steel industry is still in a long-term downturn

Mei Pengqi, a market analyst, said that from the perspective of the business situation of enterprises, the severe winter situation of the steel industry has not been fundamentally changed, and the difficult situation of production and operation of steel enterprises has not been significantly improved

half of the steel enterprises lost money in 2015

in December 2015, the steel PMI rebounded to 40.6%, up 3.6 percentage points from the previous month, breaking away from the nearly seven-year low set in November

according to the data provided by the organization, only on January 3, 2016, strip steel increased by 40-100 yuan/ton, section steel increased by 40-70 yuan/ton, construction steel increased by 30-90 yuan/ton, and some products and manufacturers increased several times in a single day

in most of January 2016, steel prices showed a steady state. According to the monitoring of Xiben Shinkansen, the steel index on February 1 was 2040 yuan/ton, and the highest point in January was 2090 yuan/ton

mi Pengqi told that the trend of steel price depends on production and demand. Because it belongs to the freezing point of demand during the Spring Festival in 2016, steel mills dare not rush to resume production, and the price trend remains to be observed

it is worth noting that in the itemized data of steel PMI in January 2016, the recovery of production index and order index may make the steel market after the Spring Festival more worthy of expectation

according to the data of the National Statistics Bureau, China produced 804 million tons of crude steel in 2015, a year-on-year decrease of 2.3%, which is the first negative year-on-year increase in domestic crude steel production since 1981

however, according to the data from China Iron and Steel Association, in the first ten days of January 2016, the average daily output of crude steel of key iron and steel enterprises was 1.5681 million tons, an increase of 52600 tons month on month, an increase of 3.47%

GAO's R & D team with Suzhou as the main body can quickly connect with suppliers all over the country. Qiu Yuecheng, a senior researcher, said that the average daily output of crude steel of key enterprises rebounded for the first time after falling for 50 consecutive days, indicating that with the recent decline in the loss range of steel mills, the operating rate of steel mills has increased

however, the increase in operating rate is quite limited. According to the latest steel plant operating rate survey released by Mysteel on January 29, the blast furnace operating rate in that week was 73.90%, up only 0.14% from the previous week

according to the statistics of CISA, the member steel enterprises lost 64.534 billion yuan in 2015, with a loss of 50.5%. Qiu Yuecheng believes that most enterprises are still in a loss situation, and the shortage of funds will limit the rise of the operating rate of steel mills. In addition, the environmental storm also has an obvious inhibitory effect on the release of steel plant capacity

in addition, according to MI Pengqi's analysis, the large-scale production of iron and steel is limited, and the recovery of orders received by iron and steel enterprises can undoubtedly ease the contradiction between supply and demand in a short time

according to the statistics from China IOT, in January 2016, the new order index of the steel industry was 49.9%, an increase of 9.0 percentage points over the previous month. The index rose twice in a row and reached the highest level since July 2014

in Qiu Yuecheng's view, with the rise of steel prices in the early stage, the enthusiasm of agents to order has increased, and some steel mills have issued winter storage promotion policies, the quantity of orders received by steel mills has increased, and the market procurement demand has rebounded

the shortage of funds accelerates the recovery of PMI in the iron and steel industry, although it indicates the improvement of the situation of the industry. However, as a heavy asset industry, the tightening of capital situation may accelerate the reform of the industry

the executive meeting of the State Council held on January 27 determined to resolutely reduce and withdraw relevant loans and support the resolution of excess capacity for enterprises and backward production capacity that have long-term losses, lose solvency, or fail to meet environmental protection and safety production standards and have no hope of rectification

according to Qiu Yuecheng, China's crude steel production capacity is about 1.15 billion tons, the output is about 800 million tons, and the capacity utilization rate is less than 70%, which is a typical serious overcapacity. Under this background, the capital chain of the iron and steel industry is worrying

on January 21, a joint-stock bank issued a notice to include steel, coal and non-ferrous metal smelting in the scope of compression and withdrawal from the industry, and implement different management strategies for industry stock customers

many people, including Qiu Yuecheng, told that this also means that the situation of bank loan restriction and withdrawal of loans to the iron and steel industry in 2016 will continue, and the tense situation of capital in the industry is still difficult to change

according to the statistics of China Iron and Steel Association, at the end of November 2015, the balance of short-term and long-term loans of banks of key iron and steel enterprises was 1335.9 billion yuan, a year-on-year decrease of 2.25%. However, the monthly financial expenses were 90 billion yuan, a year-on-year increase of 1.88%

in Qiu Yuecheng's view, this also shows that although the central bank's monetary policy continued to be loose in 2015, it basically failed to benefit the steel industry, and the tension in the industrial capital chain is still increasing

however, analyst Liu Xinwei believes that from the perspective of resolving production capacity, financial means is undoubtedly the most straightforward, which is also a market means that zombie enterprises have to exit

according to Li Xinchuang, President of the Metallurgical Industry Planning Institute, the number of employees in zombie enterprises that have stopped production or semi stopped production with a steel production capacity of more than 93 million tons is as high as 300000 or 400000. How to settle these employees is a top priority

the Ministry of industry and information technology has already set the tone for the disposal of zombie enterprises. Miao Wei, Minister of the Ministry of industry and information technology, said that the disposal plan of zombie enterprises will adhere to the principle of more mergers and less bankruptcy, properly arrange employees and guide zombie enterprises to exit smoothly

according to the survey results released by Shanghai Steel Union on January 21, the production capacity involved in shutdown for more than half a year is 22.3 million tons. This part of zombie enterprises that have stopped production for a long time may become the preferred target for elimination

Zhao Xizi, former honorary president of the chamber of Commerce for metallurgy of small and medium-sized enterprises of the all China Federation, believes that among the more than 500 steel production enterprises, half of the losses in the future are high probability events, some will die, and some will be merged and reorganized

according to the analysis of Shanghai Steel Union, 22.3 million tons of long-term shutdown enterprises may be removed in 2016. As for the de capacity of long-term loss making enterprises in the later stage, it may take years or even longer to complete

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