Overcapacity shrinks in the non-ferrous metal industry

On April 23, the website of the National Development and Reform Commission announced the first quarter of the four major industries of iron and steel, non-ferrous metals, building materials, and chemical industry, showing that the growth rate of the four major industries slowed down compared with the same period of last year, including the cement production growth in the building materials industry. The year-on-year decrease of 10.8 percentage points resulted in a decrease of 11 percentage points in ferroalloy production growth in steel compared with the same period of last year, which is a product category that has seen more growth in the four major industries.

Chen Wei, a macroeconomic analyst of national securities, told reporters that a significant slowdown in the growth of these industries is related to the overall economic environment. “The above industries have experienced serious overcapacity. In the coming period, this situation It will continue to occur, and it is expected that the growth rate will still fall in the second quarter and even the second half of the year, but the situation may be slightly better than the first quarter."

According to data released on the website of the National Development and Reform Commission, in the first quarter of this year, China's crude steel production was 174.22 million tons, which was a year-on-year increase of 2.5%, a year-on-year slowdown of 6.2 percentage points; steel production was 224.64 million tons, an increase of 6.5%, a decrease of 7.2 percentage points. In addition, coke and ferroalloys have different signs of slowing growth.

Anhai Xuan, a researcher in the metallurgical industry of China Investment Advisors, stated that China's steel market is greatly affected by fluctuations in raw material prices. The current overcapacity in the steel industry in China, coupled with the declining demand in the off-season entering the steel market, will inevitably lead to a slump in the steel market.

Chen Wei also believes that not only the steel industry, many industries have excess capacity, "mainly the impact of the previous 4 trillion investment plan, the next method can only be to reduce production capacity."

Although the growth of steel production slowed down significantly in the first quarter, the price of steel in our country rose slightly. In March, the average price index of steel prices in the domestic market was 120.33, a rise of 1.25 points from the previous month and a fall of 11.29 points year-on-year.

However, An Haixuan believes that due to China's strict control measures on real estate, making the downstream market demand decreased, coupled with the high cost of steel companies, the steel market will still take some time to pick up.

In addition to the steel industry, the non-ferrous metals, building materials, and chemical industries are also facing similar conditions. In the first quarter, the output of ten kinds of non-ferrous metals nationwide was 8.4 million tons, an increase of 5.8% year-on-year, and the growth rate slowed down by 3.5 percentage points year-on-year. In addition to electrolytic aluminum, the price of major non-ferrous metals rose slightly.

In the building materials industry, the country’s cement output was 3,9810 million tons, an increase of 7.3% year-on-year, a year-on-year slowdown of 10.8 percentage points; flat glass production was 179.83 million weight cases, an increase of 4.3%, slowing by 6.5 percentage points. Although the growth rate slowed down at the same time, the price of flat glass rebounded and cement prices fell.

The added value of the chemical industry increased by 13.5% year-on-year, representing an increase of 1.8 percentage points year-on-year. Among the key monitored chemical products, the prices of urea, yellow phosphorus, and imported potassium chloride rose from the previous month, and prices of other products fell slightly.