SMM net news: recently, the national development and reform commission, the ministry of industry and the national bureau of statistics jointly issued "on the steel industry production capacity and production investigation and verification notice, demand for steel companies for nearly three years of equipment capacity and change situation investigation, verification and explain, to further consolidate the iron and steel industry to the process capacity. Obviously, for the current steel industry, based on the complexity and risk of the macro economy, coupled with the instability of market demand, overcapacity is still the most significant pain point of the industry, the industry still needs to be vigilant. Among them, China as a large steel production country, the issue of excess capacity can not be ignored.

From the perspective of market situation, with the continuous implementation of supply-side structural reform, the supply-demand relationship of the steel industry is basically in a relatively stable state. According to the data, from January to October 2019, China's crude steel output was 829.215 million tons, up 7.4% year-on-year, with little fluctuation. At the same time, under the propulsion of production capacity to move, China's steel market conditions ease pains, crude steel, more than 80% of the capacity utilization rate has to return to a reasonable interval, and since 2016, our country to cut steel production capacity of 150 million tons, is the world's steel production capacity cuts of 114%, it can be said that overall, steel to capacity already marched into the important stage of structural adjustment.

But it is important to note that although effective to production process in advance, but in the infrastructure investment under the influence of volatility, coupled with the domestic iron ore concentrate, imported iron ore, scrap steel, coking coal, high raw material prices (September 1, 2019 - the main raw material procurement cost compared with the same period last year, imports of iron ore rose 31.7%, 21.5% rise in domestic iron ore concentrate, scrap steel rose 8.8%), market demand side is relatively weak, in the third quarter of this off-season steel mills profit margins continued to show weakness, not to increase production efficiency. From the perspective of corporate earnings, during the period from January to September 2019, China steel price index (CSPI) composite index averaged 108.58 points, down 7.17 points or 6.2% year-on-year. Among them, the average long material index is 114.61 points, down 5.0% year-on-year, and the average plate index is 104.81 points, down 7.5% year-on-year. Among them, from January to September 2019, the sales revenue of cisa member iron and steel enterprises reached 3.18 trillion yuan, up 11.6% year on year. The total profit was 146.6 billion yuan, down 32.0% year-on-year. The profit margin on sales was 4.6%, down 3 percentage points from a year earlier.

In fact, for the moment, with the policy and the efforts of the industry, to production process in iron and steel industry in our country has already entered the stage of deepen adjustment based on this, the relevant laws, regulations and standards of power is relatively necessary, treat capacity does not pass, after all, still need to be pay attention to, makes the enterprise to improve efficiency and rectification at the same time, to treat excess of backward production capacity is firmly off, and the related incoming steel mills or will learn under their own development and innovation, but based on the instability of the macro market environment, the wind direction also has certain volatility in the infrastructure investment, and the majority of steel mills in performance throes, In addition, the prices and taxes of related raw materials in the future may put some pressure on steel enterprises. Therefore, relevant market investors should maintain a rational and prudent attitude. （From SMM)