company news about The production control measures in the steel industry will play a "calming" role.

Since April, domestic steel prices have fluctuated and declined. The prices of rebar, wire rod, hot-rolled coil, and cold-rolled coil have all dropped, while the price of medium-thick plate has slightly increased. The prices of raw materials, such as iron ore and scrap steel, have also declined. In the short term, the domestic steel market will further show differentiation in its trends, with the supply and demand sides basically balanced. Recently, Wang Jianhua, the chief analyst of Shanghai Steel Link, stated at an industry event, "It is certain that the prices of steel varieties less affected by the US high tariff policy are expected to rebound moderately in the near future."
Wang Jianhua analyzed that in April, the overall trend of the domestic steel market was mainly downward. Although there was a rebound in the first half of April, it was only temporary. He believes that for steel prices to truly rebound, it must be analyzed from the policy aspect and its impact.
On one hand, after the steel industry's production control policy was introduced, it will provide a phased benefit to steel prices. In mid-March, the National Development and Reform Commission issued a document proposing that "continuous implementation of crude steel production control will be carried out this year." In Wang Jianhua's view, the steel industry's production control policy should be introduced and implemented as soon as possible, which is conducive to leaving sufficient operational space for steel enterprises, conducive to the stable operation of the market, and conducive to maintaining high-quality development of steel enterprises under the pressure of the US high tariff policy.
" This year, the steel industry's production control policy will play a stabilizing role. We cannot change the demand, but can adjust the supply in combination with the demand. " Wang Jianhua predicted that from a total perspective, this year's direct and indirect export scale of steel in China may be reduced by 30-40 million tons, and domestic demand may be reduced by 5-10 million tons. It is expected that the total controlled production this year will be around 50 million tons.
According to statistics, in the first quarter of this year, China's crude steel output increased by over 2.7 million tons. Shanghai Steel Link's monitoring data shows that the daily output of iron water in China increased by 150,000 tons compared with the same period last year. Based on this estimation, China's crude steel output in April will increase by about 4.5 million tons compared with the same period last year, and it will increase by about 6.5 million tons in the first four months of this year.
"Based on this year's controlled production of 50 million tons, the crude steel output in the following five to twelve months will decrease by about 56.5 million tons, with an average monthly reduction of over 7 million tons, and the pressure of reduction is relatively large." Wang Jianhua admitted, "At present, most steel enterprises in China have not yet formulated clear production control plans, which also increases the difficulty of production control in the later period."
"From the demand side, generally speaking, large enterprises start receiving orders for May in April. It is understood that the demand in some fields has declined, but the overall decline is not significant. One of the main reasons is that the US high tariff policy has an 90-day exemption period for some countries, which has stimulated the release of some export demand at an accelerated pace." Wang Jianhua said, "The demand situation in the short term still needs to be observed. It is expected that the demand scale in May will be reduced by 3 million tons."
On the other hand, a series of macro policies to counter external pressure will benefit steel prices. On April 25th, the Political Bureau of the Central Committee of the Communist Party of China held a meeting and first mentioned "coordinating domestic economic work and international economic and trade struggles." Wang Jianhua said, "The word 'struggle' means that all parties in the market need to be prepared for 'struggle'. The meeting emphasized that we should accelerate the implementation of more proactive and effective macro policies, make better use of more proactive fiscal policies and moderately loose monetary policies; accelerate the issuance and use of local government special bonds, ultra-long-term special treasury bonds, etc.; secure the bottom line of 'three guarantees' (basic livelihood guarantee, salary guarantee, and operation guarantee) at the grassroots level; timely cut the reserve requirement ratio and interest rates to maintain ample liquidity and provide strong support for the real economy; create new structural monetary policy tools and establish new policy-oriented financial tools to support scientific and technological innovation, expand consumption, and stabilize exports, etc.; strengthen the consistency of policy orientation. The meeting also proposed that we should continuously improve the policy toolkit for stabilizing employment and the economy, and introduce the established policies earlier." Early results were achieved. In response to changes in the situation, incremental reserve policies were promptly introduced, and extraordinary counter-cyclical adjustments were strengthened to fully consolidate the fundamentals of economic development and social stability.
Wang Jianhua believes that, based on the signals revealed by the Central Committee of the Communist Party of China's meetings, it is expected that macro favorable policies will be accelerated in release, which is likely to moderately restore the pessimistic sentiment in the market and provide certain support for the increase in steel prices.
"Actually, the main reason for the current low valuation of domestic steel prices is that the pessimistic expectations brought about by the high tariff policy in the United States persist for a short period of time, and another reason is that some steel enterprises expand production as soon as they make a profit, disrupting the market supply and demand balance," Wang Jianhua analyzed. In the short term, the domestic steel market will face possible subsequent industrial and macro policies to alleviate external pressure. Market pessimism will undergo a moderate repair, and steel prices are expected to experience a phased fluctuation and rebound, with the trends of different varieties further differentiating. From raw materials, the pattern of oversupply of raw materials is difficult to change. Especially at present, the valuation of iron ore is high, and there is still room for it to continue to fall.
Wang Jianhua suggests that steel enterprises should strengthen self-discipline, firmly implement the "three determinations and three do-nots" principle (determine production based on sales, do not turn products into inventory; determine production based on efficiency, do not incur operating losses; determine sales based on cash, do not turn cash into accounts receivable), actively control production, and adjust production structures for different varieties. Steel traders should actively participate in the trading of varieties with good fundamentals. Terminal users should be flexible in purchasing and adhere to the operation strategy of combining spot and futures.