Few thoughts for steel pipe industry

There are many reasons for the sharp increase in domestic production of rectangular hollow section his year, but the direct reason is the increase in effective supply, reflected in the statistical data, the capacity utilization rate of the same caliber has been greatly increased. Why has the effective supply increased so much? In brief, it is mainly due to the comprehensive effect of three aspects: the substantial improvement of industry profits in recent years, the policy of capacity replacement, and the development and application of new steel technology and new technology.

galvanised steel pipe
The first is a sharp improvement in industry profits, which has greatly boosted the confidence of steel entrepreneurs in investing.The comprehensive ban on “ground steel” and the strict environmental protection policy quickly suppressed the market supply in the short term. By lowering the cost of raw materials and raising the price of steel at the same time, the profit of the industry soared. The gross profit of ordinary rebar tons reached nearly 2000 yuan.

Second, higher-than-expected profits will boost confidence, promote rapid production capacity replacement, and reinvigorate some zombie production capacity.Under the effect of making money, some enterprises are full of expectations for the future, while others are anxious to seek scale advantages in the face of intensified competition in the future. The willingness to update or expand capacity is generally very strong, and many steel pipe suppliers even purchase capacity indicators to expand. Therefore, we see that the cumulative growth rate of fixed asset investment in ferrous metal smelting and rolling processing industry in the first half of this year is over 40% year-on-year, which should be a record high.It is conservatively estimated that in the next three years from this year, more than 70 million tons of pig iron capacity will be put into production, and a considerable part of this capacity will be replaced through early deadlock. If the capacity of bankruptcy restructuring in the previous two years is taken into account, the total China steel tube factories will not be less than 50 million tons.

The innovation and application of iron and steel production technology has been implemented rapidly, and the production efficiency and actual output capacity of enterprises have been greatly improved.If you turn down the volume and turn up the volume of mild steel tube, the technological level of the equipment will basically go up to a higher level. Although the volume is reduced and replaced, the actual production capacity of the new equipment will not decline but may also be improved due to the improvement of utilization coefficient and production efficiency.

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Post time: Nov-13-2020
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