Construction machinery strides out of the steel industry transformation is imminent

In the supply of raw materials for the steel industry, the iron ore industry is closely related to the construction machinery industry. In the rapid development of the steel industry, neither the policy level nor the steel companies have given sufficient attention to this upstream area. The entire industry thinks about imports when it comes to raw materials. At present, China's iron ore is more than 70% dependent on foreign countries and consumes 60% of the world's iron ore. However, China owns less than 10% of all mines overseas, so China's iron ore prices have remained high.

The steel industry has greatly stimulated the local economy. In 2012, the profit rate of the steel industry dropped by 98%, while the total tax revenues of its national tax and local tax have hardly dropped. This shows that the local government is still promoting the expansion of its production capacity. However, in the oversupply market, the transformation of the steel industry is imminent and it is obviously not desirable to continue to expand steel production capacity.

In 2013, the demand for iron ore products in China was 1.11 billion tons, and the import of iron ore was about 770 million tons. At present, the price of steel in China is basically the same as that in 1994, while the price of iron ore is nearly 8 times that in 1994. At the same time, the cost of coal, manpower, transportation, etc. are rising. This is the main problem in the steel industry. “The oversupply of steel has led to long-term low prices.” Luo Baihui, chief analyst of Jinmo Steel, believes that China’s powerful iron ore companies will build more long-term, stable, diversified, multi-channel iron ore mines overseas. Stone supply base, which will drive the construction machinery industry to go out.

The problem encountered in the transformation of the industry is that the output of steel is too concentrated. In terms of resource guarantee and sustainable development, the layout of the industry is not reasonable. However, on the one hand, the steelmaking capacity of China's steel companies has reached the highest level in the world. The world's best modern steel plants are all in China. In the process of development, the quality of the steel industry has also grown by leaps and bounds. The variety and quality of the iron and steel industry can meet the needs of users, including the demand for steel used to meet the rapid development of construction machinery.

In February 2013, the daily output of China's steel reached 2.2 million tons. As a result, there will be 800 million tons of steel production throughout the year, and the market will be unacceptable. It is expected that China's crude steel production and consumption will continue to maintain a low-speed growth trend in 2013, with crude steel production reaching approximately 746 million t and apparent consumption of crude steel around 700 million tons. According to Luo Baihui, in the future, China's steel prices will remain at a low level, and the benefits of steel companies will also be difficult to improve, due to excess capacity. There will be no significant increase in investment in the steel industry, and there may be a downward trend. Industry associations do not encourage the addition of ironmaking and steelmaking capabilities. Overall, it is predicted that in 2013, there will be low, high, upward fluctuations.