In November, driven by strong macro policy expectations, the concentrated release of rush demand, and the resilience of raw material costs, the release of steel mills' production capacity was still under constraints. According to the National Bureau of Statistics, in November 2023, China's crude steel output was 76.1 million tons, a year-on-year increase of 04%, from a year-on-year decline in the previous month to an increase (see Figure 1 for details).The output of pig iron was 64.84 million tons, a year-on-year decrease of 48%, a year-on-year decline of 20 percentage points (see Figure 2 for details);The output of steel was 110.44 million tons, a year-on-year increase of 42%, a year-on-year growth rate of 13 percentage points (see Figure 3 for details). In terms of cumulative output, from January to November, China's crude steel output was 952.14 million tons, a year-on-year increase of 15%；The output of pig iron was 810.31 million tons, a year-on-year increase of 18%；The output of steel was 125282 million tons, a year-on-year increase of 57%。
Figure 2 Monthly pig iron production from 2017 to 2023
Figure 3 Monthly steel production from 2017 to 2023
Crude steel Nissan fell for five consecutive months
From the perspective of the average daily output of pig iron, crude steel and steel in the country, the daily output of crude steel in November 2023 has declined for 5 consecutive months, but it is higher than the level of the same period last year, according to the data of the National Bureau of Statistics, the average daily output of crude steel in November was 25370,000 tons, down 05%, a month-on-month decline narrowed by 63 percentage points (see Figure 4 for details);The average daily output of pig iron is 21610,000 tons, down 32%, the month-on-month decline narrowed by 32 percentage points;The average daily output of steel is 36810,000 tons, an increase of 04%, from the decline in the previous month to the rise again. Pig iron and crude steel have shown a continuous decline month-on-month, while steel production has turned up again, due to the impact of continuous differentiation of steel profits, there are certain twists and turns in the slow production rhythm of domestic steel production enterprises.
Figure 4 Monthly crude steel production per day from 2017 to 2023
From the perspective of the average daily output of key large and medium-sized iron and steel enterprises, the production capacity release of large and medium-sized steel production enterprises has slowed down for five consecutive months. According to the statistics of the China Iron and Steel Association, the pig iron output of key large and medium-sized iron and steel enterprises in November was 18640,000 tons, down 08%, the month-on-month decline narrowed by 25 percentage points, up 20%；Crude steel Nissan 19850,000 tons, down 1. month-on-month5%, the month-on-month decline narrowed by 34 percentage points, down 1 percentage point year-on-year0%；Steel Nissan 20410,000 tons, up 01%, month-on-month from the decline in the previous month turned to rise, up 2. year-on-year9%。
The daily decline in crude steel production in December may accelerate
Since December, due to the guidance of the policy expectations of the first economic work conference, the blessing of various policy funds, the terminal demand has shown a more obvious resilience, as well as the joint impact of factors such as the increased resilience of cost support, the domestic steel market has shown a rise and fall, and under the joint suppression of high costs and off-season demand, the willingness of steel mills to release production capacity has continued to weaken. Judging from the current changes in the operating rate of blast furnaces, the production release of iron and steel enterprises has shown a continuous and slight decline. According to the survey data of Lange Steel Network, the average blast furnace operating rate of 100 small and medium-sized steel enterprises in the first two weeks of December 2023 was 770, down 08 percentage points (see Figure 5 for details);The average daily output of molten iron of 201 production enterprises in the country is 22150,000 tons, a decrease of 3 from the same period last month80,000 tons, a decrease of 4 from the monthly average in November30,000 tons.
Figure 5 The operating rate of blast furnaces of major iron and steel enterprises in China from 2017 to 2023
Judging from the ten-month production data of key large and medium-sized iron and steel enterprises, due to the combined impact of the traditional off-season demand effect and loss pressure, the production capacity release of large and medium-sized iron and steel production enterprises continues to be limited. According to the statistics of the China Iron and Steel Association, the average daily output of pig iron of key steel enterprises in early December 2023 was 181430,000 tons, down 321%, up 1. year-on-year76% (see Figure 6 for details);In early December, the average daily output of crude steel of key steel enterprises was 193160,000 tons, down 419%, down 277% (see Figure 7 for details);In early December, the average daily output of steel products of key steel enterprises was 191250,000 tons, down 1226%, up 079% (see Figure 8 for details).
Figure 6 Pig iron production of large and medium-sized iron and steel enterprises from 2017 to 2023
Figure 7 Crude steel production of large and medium-sized iron and steel enterprises from 2017 to 2023
Figure 8 Steel production of large and medium-sized iron and steel enterprises from 2017 to 2023
Since the beginning of this year, in the context of the slow recovery of the global economy and the weakening of development momentum, the national economy has continued to rebound and improve with the effectiveness of various macro policies, but it should also be noted that there are still many external instability and uncertainties, domestic demand is still insufficient, and the foundation for economic recovery still needs to be consolidated. In 2024, we must adhere to the principle of seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking down, and introducing more policies that are conducive to stabilizing expectations, growth, and employment, and actively forging ahead in changing modes, adjusting structures, improving quality, and increasing efficiency, so as to continuously consolidate the foundation for stability and improvement. It is necessary to strengthen the counter-cyclical and cross-cyclical adjustment of macroeconomic policies, continue to implement a proactive fiscal policy and a prudent monetary policy, and strengthen the innovation and coordination of policy tools.
At present, the domestic steel market has entered the traditional demand off-season, under the influence of a wide range of blizzards and cold waves, the off-season effect of terminal market demand has accelerated, and the domestic steel market has gradually entered the traditional "winter storage", and the manufacturing industry has entered the off-season after impacting the annual output value, and the collection of funds at the end of the year will effectively support the capital needs of major projects at the beginning of next year, so as to make adequate preparations for the construction season in the coming year.
It is expected that due to the combined impact of factors such as the fulfillment of policy expectations, the continued weakening of supply, the emergence of off-season effects, and the support of cost resilience, the willingness of domestic steel producers to release production capacity will remain weak, so it is expected that domestic steel production will maintain a downward trend in December. According to the estimate of Lange Iron and Steel Research Center, the daily output of crude steel in December may fall to the level of less than 2.5 million tons, of which the daily output of crude steel of key large and medium-sized iron and steel enterprises may remain below the level of 2 million tons。(Lange Iron and Steel Research Center, Ge Xin, original article**Please indicate the source).