April 19, the National Development and Reform Commission said that in 2022, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment, the National Bureau of Statistics will continue to carry out the work of the national crude steel production suppression, to ensure that the realization of the national crude steel production year-on-year decline. Crude steel production reduction has once again become a market hotspot, the author of the crude steel supply side of the situation to do a brief comment.

　　Crude steel production in 2021 was high before and low after the trend

　　In December 2020, the Ministry of Industry and Information Technology put forward 2021 crude steel production year-on-year decline in the task, from the actual effect, 2021 crude steel production clearly showed a high trend before and after the low trend. 2021 first half of crude steel production rose amazingly, in March rose 10.89%, up 19.04% year-on-year, in May, the single-month output of close to 100 million tons (99.45 million tons). The overall atmosphere of the market at that time better, increasing crude steel production did not cause excessive accumulation of inventory and serious disturbances in supply and demand, but rather the rapid rise in steel prices inspired the enthusiasm of steel traders. In the market's craziest April, the national construction steel daily turnover has remained above 200,000 tons, the lowest value of more than 200,000 tons, the highest hit a record high of 350,700 tons. At the same time, high raw material prices continue to conduct to the downstream terminal, the domestic PPI (Industrial Producer Price Index) in May rose 9.0% year-on-year, up 1.6% from the previous year. 2021, the second half of the year, the task of suppressing crude steel production officially entered the landing stage of implementation, and due to the first half of the year 2021 crude steel production increase is larger, the second half of the year, the pressure on the task of the production of a more arduous. In the National Development and Reform Commission and other multi-location steering group to promote, superimposed on the energy consumption double control policy, real estate demand has weakened significantly and other factors, crude steel production has declined significantly, in September 2021, the chain decline even more than 11%, and September ~ November month-on-month decline of more than 20%. After determining that the annual target task is basically completed, crude steel output rebounded in December 2021. 2021 national crude steel output was 1.035 billion tons, down 2.8% year-on-year, and crude steel output was suppressed by 30 million tons.

　　Crude steel output in the first quarter of 2022 fell year-on-year

　　Downward pressure on the domestic economy this year, in the external environment, the Federal Reserve entered the interest rate hike cycle, the Russian-Ukrainian conflict, commodity raw material price increases triggered by imported inflation, etc., the internal environment is faced with demand contraction, supply shocks, expectations of the “triple pressure” and the new Crown Pneumonia epidemic prevention and control of increased difficulty and other situations. Data, the National Bureau of Statistics announced the March manufacturing PMI (Purchasing Managers' Index) was 49.5%, down 0.7 percentage points, falling into contraction for the first time in 5 months. In this case, stabilizing growth has been mentioned many times by the National People's Congress. on March 29, the National People's Congress made it clear that stabilizing growth will be put in a more prominent position, and deployed the use of government bonds to expand effective investment, and to promote the shortcomings of the board to increase the strength and stable economic growth.

　　It is due to the domestic economic downward pressure this year, January ~ March market for the year whether to launch a new crude steel suppression policy there are different voices, and April 19th regulatory level statement for the whole year the steel industry development direction. National Bureau of Statistics data show that in March 2022, China's crude steel production of 88.3 million tons, down 6.4% year-on-year; pig iron production of 71.6 million tons, a year-on-year decline of 6.2%; steel production of 116.89 million tons, a year-on-year decline of 3.2%. 2022 January ~ March, the national crude steel production of 243.38 million tons, a year-on-year decline of 10.5%.

　　The decline in crude steel production in the first quarter of this year compared with the same period in 2021 mainly stems from the following three points: First, crude steel production in 2021 showed a trend of high before and low after, and the production restriction mainly occurred in the second half of 2021, resulting in a high base in the beginning of 2021; secondly, February this year coincided with the period of the Beijing Winter Olympics, and Beijing-Tianjin-Hebei and the neighboring areas took different degrees of production suspension and restriction measures; thirdly, the recurrence of epidemics led to the obstruction of logistics and transportation, especially some of the steel production and logistics industries, and the production of steel and steel was down by 3.3%. Especially part of the steel production and logistics industry focus on the region's regional control further led to the decline in crude steel production. It can be seen that the short-term pressure to reduce production is still available, the need for regulatory intervention is not great. In the medium and long term, with the gradual easing of the domestic epidemic, the 2nd and 3rd quarter crude steel production is likely to continue to rebound. If the 2nd and 3rd quarter average monthly production more than March production, then in order to achieve the annual crude steel production year-on-year decline in the target, the 4th quarter of the pressure to reduce production will come to the fore, superimposed on the environmental protection pressure of the heating season, when the regulatory layer or will be crude steel production direct intervention, but the introduction and implementation of policy will be relatively mild.

From the year-on-year data, crude steel production in the 1st quarter of this year is lower than the same period last year, and from the chain data can be derived some changes. National Bureau of Statistics data show that in March 2022, China's average daily crude steel production was 2,848,400 tons, the average daily production of pig iron was 2,309,700 tons, and the average daily steel production was 3,770,600 tons.The average daily crude steel production in March was lower than that of the same period of last year, but it has been restored to the best level since July 2021, which indicates that the production of steel mills is on a moderate upward trend.

　　According to the above, the author of this year's regulatory layer to reduce crude steel production task to do the following interpretation: First, in the epidemic disturbances, logistics and transportation blocked, steel mills raw material inventory is insufficient in the background, the current steel production is only a mild rebound, the regulatory layer directly intervene in the necessity of not much; Second, according to the research data statistics, on April 20, Tangshan City, Hebei Province, the average billet gross profit of 16 yuan / ton, the average electric arc furnace profit of 29 yuan / ton. Electric arc furnace average profit of 29 yuan / ton, steel mills take the initiative to significantly increase production willingness is not strong; Third, at present, the average daily crude steel production of 2,848,400 tons, a decline of 6.09% compared with the same period last year, lower than last year's maximum value of 12.67%, basically flat at last year's average (2,825,400 tons), that is, this year's pressure to reduce the production of significantly less than last year; Fourth, experienced last year's crude steel production and price of Big ups and downs, the introduction and implementation of this year's policy will be more moderate, and the current production rhythm of enterprises also left the implementation of flexibility.

　　In summary, the current domestic economic downward pressure, and the epidemic repeatedly led to the peak season delayed, the market as a whole showed a weak pattern of supply and demand. In the medium and long term, in order to achieve the annual economic growth target of 5.5%, growth stabilization policies will gradually fall, and if the domestic epidemic is alleviated, the real estate industry rebound and infrastructure support, end demand is expected to gradually recover. Based on this, I believe that the short-term crude steel production suppression on the market to a limited extent. If the medium and long term steel demand can be effectively improved, superimposed on the crude steel production suppression policy, steel prices may maintain a stable and strong trend. From a full-year perspective, the task of reducing crude steel production as a whole will be more favorable to the steel, to neutral more views, can be low more layout.