Iron and steel industry PMI index in April was 49.1, down 1.5 percentage points from last month, below the "wing line." April steel industry orders fell to 46.9%. But the production index was 56.2%, indicating that iron and steel production enthusiasm is not reduced.

In the context of fluctuations in steel prices, orders fell in the context of iron and steel enterprises still maintain a high production enthusiasm.

May 2, Hebei Province, metallurgical industry association released in April Hebei Iron and Steel industry data. PMI was 45.6%, the chain fell 2.8 percentage points, the lowest level since the beginning of this year, the main reason is the demand is not high. In April, the new order index was 40.0%, the chain fell 10.0 percentage points.

On the previous day, according to the figures published by the Iron and Steel Logistics Professional Committee, the steel industry PMI index in April was 49.1, down 1.5 percentage points from the previous month, below the "wing line." April steel industry orders fell to 46.9%. But the production index was 56.2%, indicating that iron and steel production enthusiasm is not reduced.

Why did this lead to this situation?

21st century economic report reporter learned that by the end of June this year, more than 100 million tons of steel production capacity will be banned. This part of the production capacity may lead to the reduction of construction steel supply, which led to price increases. Which makes a lot of iron and steel enterprises that steel prices in May and June this year will be a rebound.

Beijing University of Science and Technology Institute of Metallurgy Professor Xu Zhongbo told reporters that the recent steel prices did rebound. But then, the price of steel may keep the range of shocks. "The reason is that land to steel production capacity may indeed increase the price of construction steel, but the city 's recent real estate regulation and control, making the demand for rebar is also reduced.

Iron and steel enterprises do not cut production

According to the data released by the China Iron and Steel Logistics Committee, the PMI index for the steel industry in April was 49.1%, up from 51.4% in February and 50.6% in March.

Specifically, in April, the new order index for the steel industry was 46.9%, down 3.7 percentage points from the previous month and retreated below 50% after a lapse of three months and fell to its lowest level since July 2016.

But the order to reduce the steel industry after the production to speed up. In April, the steel industry production index was 56.2%, up 4.2 percentage points from last month. The index has risen for four consecutive months.

There are two reasons for this situation: First, the current profits of steel enterprises better; secondly, the steel industry generally judge, because the national steel to increase production capacity, while environmental management efforts are also strengthened , Supply and demand in the short term may be some changes.

According to the previous report of the Iron and Steel Industry Association, the current provinces and cities to clean up the strip of steel enterprises have more than 500, involving capacity of 119 million tons. And from May 2 start more than 3 weeks time, Development and Reform Commission, Ministry of Industry and so will be around to start the removal of the steel inspection. In the end, the land to be banned by the end of June.

Short-term imbalances in supply-to-production can lead to changes in steel prices. In fact, the price of steel did shock in April. March 20, Hebei billet price of 3310 yuan per ton, but to April 18 fell to 2680 yuan per ton, the cumulative cumulative rate of about 20%. Since then, steel prices rebounded, the current close to 3,000 yuan per ton. Other types of steel have also experienced similar price changes.

The current problem is that many steel companies are expecting prices to rise in May and June. But this can be achieved, still need to observe.

Hebei Province, metallurgical industry association vice president and secretary general Wang Dayong that in April due to excessive growth in resources, slow growth in demand, cost support and other factors weakened, steel prices fell, steel profits return to rational.

Outlook May, with the steel prices decline, the effective release of market risk, no obvious support in the market fundamentals, steel prices continue to shock consolidation. In particular, should pay attention to environmental protection and land and steel out of the special inspection will make steel spot market is expected to stabilize, steel prices are expected to rebound.

Pay attention to production risk

But Wang Dayong reminded the iron and steel enterprises in Hebei Province must overcome short-sighted behavior, do not blindly expand production capacity, to unswervingly to the production capacity, to leverage, cohesion seek transformation, and strive to maintain a stable operation of the industry.

In the iron and steel logistics professional committee also warned that the current domestic steel market supply pressure, demand is facing seasonal weakness, weak support for raw material costs, the late steel prices will continue to pressure. But steel to production capacity and environmental management once again strengthened, will have a positive impact on the trend of steel prices. Is expected in May domestic steel prices will be shocks to run the trend.

China Iron and Steel Industry Association, vice president of Metallurgical Industry Planning and Research Institute, said Li Xinchuang, iron and steel enterprises to carefully speed up production. Even if steel prices rise, iron and steel enterprises profit margins are not high, 2017 January-March only 2.77%, and 19% of corporate losses.

"Production capacity will give good business to create a good market environment, the output is regulated by the market demand for oversupply, the price will drop the market did not imagine that good." He said.

Another data is also worthy of steel companies alert. China's total exports of zinc in 2011, 113.39 million tons, an increase of 19.9%. In 2016, China's total exports of steel 108.43 million tons, down 3.5%. January-March 2017, China's total exports of steel 20.73 million tons, down 25%.

And the 21st century economic report reporter was informed that the current real estate regulation and control for the steel industry will continue. Many experts judge, may be slowdown in real estate investment in the second half, the impact on the iron and steel enterprises will increase.

Iron and steel senior expert Ma Zhongpu pointed out that in April the price of steel has experienced a decline in the iron and steel enterprises to speed up production to pay attention to risk. "The price of steel has fallen in April, and at present, China's steel demand has not increased, and from steel production, it is less profitable and more, leading to lower prices, and steel mills should control production."

He warns that steelmakers are now using reduced steel orders to reduce inventories, and this change determines that mills must reduce production capacity in May to maintain market stability. "It is now a good sign at the bottom of the adjustment period, and now the regulation of steel prices, the government needs to prevent fake and shoddy and environmental issues, the rest to the market to adjust.