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The reporter learned at the 6th China Tungsten-Molybdenum-Vanadium Industry Situation Symposium held on the 16th that steel demand began to show a significant reduction. Experts believe that the world economy will enter a period of adjustment. With the economic downturn, prices of resource products will also decline, and the prices of steel and iron ore will also decline.
The current loss of steel mills and the serious shortage of contracts have forced many steel companies to take the path of reducing production. Recently, many large steel companies such as Baosteel, Maanshan Iron and Steel, Laiwu Iron and Steel, and Jinan Iron & Steel have proposed to reduce production by 20%. Many private steel companies have already fallen into the dilemma of reducing production and stopping production. At the seminar, experts from the State Council and some well-known private steel companies expressed their opinions on the current situation, pointing out that although China’s steel exports reached 7.71 million tons in July and August, which hit a record high again, steel exports have already Faced with considerable difficulties, it is difficult for steel exports to increase in the fourth quarter and even fall slightly.
A person in charge of a heavy machinery company, who declined to be named, told reporters that the growth rate of the contract in the first half of the year decreased, and the contract in August had dropped significantly compared with the same period of last year. The weakening of steel demand is inevitable. This will directly affect the price trend of the steel market in the fourth quarter.
Senior industry analysts said in an interview with this reporter that in the second half of 2008, inflationary pressures led to a sharp drop in the world economy's growth rate. The economic growth of Europe, the United States, and Japan has dropped to around 1%. Some agencies predict that the U.S. economic growth will be less than 1% in the third quarter and negative growth in the fourth quarter. The economic growth rate of many developing countries has also clearly dropped. The world economy is experiencing a short-term cycle. The main reason for the cyclical decline of the economy in history has been triggered by excess product. The main reason for this cyclical downturn in the economy was the increase in inflationary pressure caused by the mad increase in the prices of resource-based products, which led to the weakening of economic growth and the formation of financial risks. The subprime risk and financial risk represented by the United States first broke out and will continue to weigh on the global economy as another important feature of the cyclical downturn in the world economy. With the sharp drop in the prices of stocks, securities, real estate, non-ferrous metals, petroleum, and steel, the financial risks of participating in the early stage of speculation are in line with the law.
The international economic recession under the pressure of inflation and financial risks will surely cause the global steel market demand to continue to weaken, and prices will fall. The frenzy of the international steel market price trend in the first half of the year stimulated rapid growth in international steel investment and production. According to the statistics of the International Steel Association, the total crude steel output of the 66 major steel producing countries and regions in the first half of the year was 696 million tons, a year-on-year increase of 5.7%. After deducting the China factor, international crude steel production was 4.3286 trillion tons, which was an increase of 3.5% compared with the 418.22 million tons produced in the same period of last year. The actual increase in production was 14.64 million tons. This means that 29 million tons of crude steel can be produced throughout the year. However, by July, China’s crude steel grew by 7.4%, while international crude steel production increased by 5.4%. In August, China's crude steel output was 42.57 million tons, an increase of 1.3%, while international crude steel output was 69.5 million tons, an increase of 4%. It is clear that the increase in international crude steel output not including China in July almost created the fastest growth in recent years, but August production has seen a downward trend.
Analysts believe that in the fourth quarter, Chinese steel companies need to be vigilant against two major risks: First, a clear fall in economic growth, affecting weakening steel market demand, and then affect the price trend of the steel market. Second, during the period when the price of the steel market was high, the market price was in disorder and there was no stable mechanism in the market. Ma Zhongpu suggested that at present, a large number of privately-owned loss-making steel mills cut production or suspend production, they should consider suspending the cancellation of export tax rebates and adjusting export taxation policies. Steel companies should formulate price strategies that are conducive to reducing market price shocks in light of the weakness in the steel market in the fourth quarter. In addition, the reduction in demand for steel products has not only led to a drop in the market price of steel products, but also affected the purchase volume and price of tungsten, molybdenum and vanadium alloy materials by special steel companies. In response to this market demand and price movements, alloy companies also need to control output and formulate pricing strategies that are conducive to market stability.
The steel market in 2008 can be described as a great change. In the first half of the year, the prices of steel products at home and abroad have climbed all the way. However, the deepening financial crisis has caused the threat of the world economic recession to hit the steel market.