On December 12, metallurgical industry planning and Research Institute issued the 2020 domestic steel demand forecast report. According to the forecast, based on the downstream industry consumption method, China's steel demand in 2020 is about 874 million tons, down slightly year on year.
Li Xinchuang, President of metallurgical industry planning and Research Institute, said at the press conference that in 2020, China's economy will maintain a stable development trend, the demand for steel in construction, automobile, shipbuilding and other industries will decline, the demand for steel in machinery industry will remain basically unchanged, and the demand for steel in energy, home appliances and other industries will continue to grow.
In 2019, benefiting from the stable growth of domestic economy, the steel consumption of China's construction, machinery, energy, home appliances and other major downstream industries maintained a good growth trend, promoting the overall rapid growth of China's steel consumption, which exceeded expectations.
According to the downstream industry consumption method adopted by metallurgical industry planning and Research Institute, China's steel consumption is expected to be 883 million tons in 2019. According to Li Xinchuang's analysis, there are three reasons why the growth rate of steel consumption in 2019 is higher than expected: first, infrastructure investment is growing rapidly; second, real estate development is better than expected; third, industrial production is generally stable.
According to the data of the National Bureau of statistics, from January to October, infrastructure investment increased by 4.2% year-on-year, 0.4 percentage points faster than last year; real estate development investment was 10.96 trillion yuan, 10.3% higher than last year, 0.8 percentage points faster than that of 2018; industrial added value above designated size increased by 5.6% year-on-year, maintaining a steady growth.
Facing the complicated international situation and the changing domestic economy, the report forecasts that the growth rate of China's GDP and fixed asset investment will be 6.0% and 5.0% respectively in 2020. It is estimated that China's steel demand will be about 874 million tons in 2020, a slight drop year-on-year.
By industry, it is predicted that in 2020, steel consumption in the construction industry will be 475 million tons, a year-on-year decrease of 0.6%; that in the machinery industry will be 142 million tons; that in the automobile industry will be 48.2 million tons, a year-on-year decrease of 3.6%; that in the energy industry will be 34.5 million tons, a year-on-year increase of 1.5%; that in the shipbuilding industry will be 10 million tons, a year-on-year decrease of 11.5%; and that in the railway industry Steel demand is about 5.5 million tons, up 1.9% year on year.
According to the report, in 2020, with the continuous promotion of national regulation and control policies, the property of real estate investment will further weaken, but the field of housing construction will continue to maintain stable operation, and the growth rate of real estate development investment will slow down; considering the continuous promotion of new urbanization represented by the construction of 5g base station, UHV, intercity rail, and new energy vehicle charging pile, it is expected that the field of urban infrastructure will be integrated China continued to maintain steady growth. Therefore, the steel consumption of the construction industry in 2020 is predicted to be 475 million tons, down 0.6% year on year.
In the next year, driven by rigid consumption demand, car scrapping and renewal, and the development of new energy vehicles, and constrained by factors such as large base, traffic congestion, environmental pollution, and purchase restriction, if there is no stimulus consumption policy, automobile output will decline compared with the previous year, with an estimated output of about 24.5 million vehicles, down 3.9% year-on-year; steel demand is about 48.2 million tons, down 3.6% year-on-year.
This year, the rising cost of raw materials has squeezed the overall profits of the steel industry. Influenced by the dam break of Vale mine in Brazil and the hurricane in Australian port, the price of imported iron ore rose sharply, from 69.03 US dollars / ton at the beginning of the year to 119.51 US dollars / ton in July; in addition to the price rise of scrap steel and coking coal, as well as the rise of environmental protection cost and logistics cost, the cost of steel enterprises rose significantly, and the manufacturing cost rose by 8-10%, which led to the year-on-year drop of most enterprises' benefits.
Data shows that from January to October, iron and steel enterprises, members of China Iron and Steel Industry Association, realized sales revenue of 3.54 trillion yuan, an increase of 11.0% year on year; realized profits of 158.8 billion yuan, a decrease of 34.1% year on year; and sales profit rate of 4.5%, a decrease of 3.1 percentage points year on year.
CITIC Securities said that in November this year, demand showed a very strong toughness, which led to a wave of rapid rise in steel prices. Combined with macro research, the growth rate of real estate and infrastructure investment is expected to be about 6% next year. Next year's demand for industrial materials is difficult to further deteriorate on this year's basis, forming a positive support for the demand of the whole steel plate. On the basis of good demand, the bottom profit of steel enterprises will be supported next year, which is expected to improve compared with the profit in the third quarter of this year.