In the first half of 2021, commodity prices have risen sharply, and iron ore prices have also risen. At present, the steel industry's production reduction in the second half of the year has begun, and the stable price and supply of bulk commodities is still one of the priorities of the work of all regions. In this context, some market views believe that production cuts in the iron and steel industry will shrink the supply of steel, or make it difficult for the supply of steel to meet demand, which is contrary to the requirement of stable prices and guaranteed supply. In this regard, reporters from Jiandao.com interviewed many industry experts and learned that the steel industry has the ability to achieve a balance between “guaranteeing production reduction” and “stabilizing price and supply”, and the steel market is expected to be worry-free in the second half of the year.

On July 29th, Wu Xianfeng, deputy director of the Department of Atmospheric Environment of the Ministry of Ecology and Environment, stated that the policy focus of the steel industry is shifting from "de-capacity" to "suppressing output", and will work with relevant parties to formulate an autumn and winter staggered production plan for iron and steel enterprises. Major steel-producing provinces such as Jiangsu and Shandong have successively made arrangements to reduce crude steel output in the second half of the year, and delegated the task of reducing production to major steel companies.

Zhang Longqiang, director of the Institute of Information Standards for the Metallurgical Industry, said that the main purpose of the reduction in steel production in 2021 is to curb the rapid rise in iron ore prices by reducing production, and to promote structural optimization of the steel industry and green, low-carbon, and high-quality development.

Ensure a year-on-year decline in crude steel production in 2021

According to data from the National Bureau of Statistics, the crude steel output in the first half of 2021 will be 563 million tons. If zero year-on-year growth in crude steel output in 2021 is set as the goal, the crude steel output in the second half of the year will be controlled within 502 million tons, which will be at least reduced from the first half of the year. 61 million tons, the minimum output accounted for 11% of the crude steel output in the first half of the year.

Due to the strong momentum of economic recovery, domestic crude steel demand in the second half of the year was still considerable, but crude steel production decreased by more than 10% of the first half of the year. Some market views believe that this may lead to a shortage of crude steel and prices will rise again.

In this regard, Zhang Longqiang said that the reduction of crude steel output in 2021 has entered a substantial operational stage, but the possibility of an imbalance between supply and demand in the steel market is very small. First, the investment structure will be adjusted, and demand in major steel consumption areas such as real estate and infrastructure construction will shrink; secondly, the export tax rebate policy for steel products in 2021 has been adjusted twice, and the steel export tax rebate has all been zeroed, which will guide the priority supply of steel Domestic market.

"The current policy encourages the import of recycled steel raw materials and primary steel, which will help alleviate the phased supply and demand imbalance that may be caused by production pressure." Zhang Longqiang said that although the current international steel prices are still higher than domestic, in the short term, steel imports A substantial increase is difficult, but as the global supply and demand gap gradually narrows and overseas replenishment of stocks is nearing completion, my country's steel imports will gradually increase.

In addition, the industry generally believes that the demand for steel in the second half of the year will be weaker than that in the first half of the year, and the cut in production is just right. The relevant person in charge of the Planning and Development Department of the China Iron and Steel Association said that reducing production is an initiative of the entire industry to adapt to changes in market demand. The current active production cuts are different from previous passive production cuts. It has been considered that steel demand may decline in the second half of 2021.

"Domestic steel demand may decline in the second half of the year." Jiang Li, chief analyst of the China Iron and Steel Association, said that real estate is developing steadily under the policy guidance of adhering to the "three stability" goals, and infrastructure construction is accelerating the issuance of special bonds and new performance management methods Under the constraints, the growth space is limited, and the steel demand of the automotive industry will only increase when the chip problem is alleviated.

From the perspective of the implementation of production reduction, steel companies often fully consider factors such as off-season and peak-season cycles and regional differences when formulating production reduction plans, so as to dynamically adapt to market demand.

The Standing Committee (Expanded) Meeting of the Party Committee of the China Iron and Steel Industry Association on August 5 proposed that while implementing the task of reducing crude steel output, it should closely track downstream steel demand, steel import and export, changes in steel products and raw material prices and inventories in a timely manner. Adjust and improve response measures.

According to people in the Jiangsu steel industry, the methods and timing of local steel companies' production reductions are not consistent. Some steel companies will evenly allocate the total output reduction to each month based on market changes, and some steel companies will reduce production at a certain point in time.

Wei Shuanshi, vice chairman of the China Iron and Steel Association, said that in the context of uncertain market demand to reduce crude steel production, it is necessary to pay close attention to changes in the demand side to achieve dynamic adaptation of supply and demand. For example, for steel companies with strong environmental carrying capacity, production capacity compliance, and environmental protection standards, they can be required to produce in compliance with market demand. Editor/Xu Shengpeng