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In fundamental reversal superposition of policy for steel industry

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The 12th session of the National People's Congress, the fourth meeting of the 5th, opened in the morning at the great hall of the people of the state council premier li keqiang to the general assembly for government work report, report, there are many, and steel industry directly or indirectly. China merchants securities pointed out that for the steel industry, mainly supply side strong clearing combined with demand side to stimulate the palm. Taken together, the supply side of a powerful combination of off and pull the palm of the demand side, may change the pattern of supply and demand of iron and steel industry, have fundamental reversal, the current steel plate with investment opportunities.


There are two related to the reform of supply side off:


A focus "is to solve the excess capacity and efficiency of authors. Focus on steel, coal industry and other industries experiencing difficulties to capacity, adhere to the market reversed transmission, enterprise main body, local organization, the central support, the use of economic, legal, technical, environmental protection, quality, safety, strictly control new capacity, resolutely eliminate backward production capacity, orderly exit overcapacity. Take the merger and reorganization, the measure such as debt restructuring or bankruptcy liquidation, actively yet prudently 臵" zombies ". Improve the fiscal and financial support policy, the central government allocated 100 billion yuan special prize money, focus on staff shunt 臵 Ann."


China merchants securities believes that eliminate backward production capacity can reach 50 million tons in 2016 (the current capacity of around 1.2 billion), 2015, 801 million tons of crude steel production, capacity utilization rate by about 67%, if the backward production capacity to achieve fifty million tons, the capacity will be increased to 71%, and the capacity of more than 70% can achieve profitable industry, industry overall growth is expected to shift from loss to profit.


Second is to "increase the intensity of industrial pollution source management, the pollutant discharging enterprises to implement on-line monitoring. Strengthen the supervision of environmental protection. The new revision of the environmental protection law must be strictly implemented, the super discharges must crack down on, must be accountable to let person".


China merchants securities believes that according to the requirements of new environmental laws, the private cost of per ton steel iron and steel enterprises will be increased by 60-100 yuan. For 2 million tons of iron and steel enterprises above designated size, basically can afford the cost, and more than 3 million tons of scale enterprises can quickly absorb the cost. In contrast, the annual production of 1 million tons and 1 million tons the following the size of the iron and steel enterprises, will be subject to severe threat to survival. Environmental protection with the increase of the cost of per ton steel will also be certain support for steel prices, the existing met the emission standard of enterprise form of good. Fully meet the national discharge standard of companies such as baosteel, taigang stainless, hebei iron and steel, emerging pipes will be obvious benefit in this round.


From the demand side, the government work report related to the iron and steel industry are:


The first is "economic growth target of 6.5% - 6.5%. Based on the consideration of economic transformation, is expected in 2016, of steel consumption per ten thousand yuan GDP will decline 7%, 2016, 2016 yuan GDP of steel consumption is about 95 kg, 2016 domestic crude steel apparent consumption estimation for 6.88-691 million tons, a drop of about 1%. Also a longer-term, per ten thousand yuan GDP of steel consumption will gradually narrowed to a stable, namely demand will decline gradually decreases, and finally reached a steady value. As the reform of supply side, capacity utilization rate will keep rising.


The second is "this year we will start a batch of" much starker choices-and graver consequences-in "planning major project. Completion of railway investment, highway investment 1.65 trillion yuan, 800 billion yuan of above reactivate 20 major water conservancy project, the construction of nuclear power, hydropower, transmission, and smart grid, oil and gas pipeline network, urban rail traffic and other major projects". Large-scale "iron, male, base construction will" pull "steel", to create opportunities for iron and steel enterprises. According to railway investment one hundred million yuan each steel demand 0.333 tons calculation, calculate railway construction pulling steel demand in 2016 about 26.64 million tons. Nuclear power and other major roads, water and electricity project will also bring huge steel market.


The third point is "deepening the new urbanization, quicken the transfer of agricultural population urbanization" and further promote the human-centered new urbanization, achieve 100 million agricultural transfer of population and the population of permanent residents in other towns, completed about 100 million people live in shanty towns and villages, lead of about 100 million people in the central and western regions nearby urbanization. Urbanization rate increase is not only good in construction and other major steel industries such as automotive and machinery will also keep the momentum of development, and this year over the next few years the two industries are expected to continue to grow.


Fourth is "to promote urban low-income housing construction and real estate market stable healthy development of shanty town housing reform this year 6 million". Assumptions on experience turn shantytowns into new housing areas such as per square meter with steel quantity of 35 kg, each shanty towns housing area of 60 square meters, will bring 12.6 million tons of steel demand.


The fifth is the "construction of more than 2000 kilometers of urban underground pipe". Actively promote the green building and construction materials, develop and prefabricated steel structure building, improve the quality of construction engineering standards and. Build wisdom city, improve the living environment, make people live more comfortable, more worry, more comfort. By estimating index file about 1 meter pipe rack is about 5.3 tons of steel, construction of a 2000 km pipeline corridor, can produce more than 1000, ten thousand tons of steel demand, especially for construction steel and the influence of the steel tube will be bigger, will bring new development opportunities for the domestic steel industry, the recommendations focus on target emerging pipes.


Number six is "intensify the building of rural infrastructure, take on a new round of rural power grid upgrading and two years to realize the stable and reliable power supply service and complete coverage of the lifting power" in plain area. Distribution network construction and retrofit relay power station, power transmission and distribution equipment, terminal equipment referred to in the construction and retrofit, need a lot of Angle steel used for power grid construction, copper aluminum has a transmission cable production, silicon steel used for power transmission and distribution equipment manufacturing, etc., for the iron and steel industry is a major positive, for the domestic silicon steel production enterprises have good stimulation, baosteel, wisco, shougang, angang recommended attention. In addition, the east tower won the bid for the state grid project for many times, may also benefit in this round of reform of the power grid.


The first seven is moderately expand fiscal deficits, mainly for the tax cuts JiangFei, further reduce the financial burden on enterprises. Government since last year's May 1 start executing reverse the resources tax and resource tax amount from the AD valorem duty reform, immediate effect, a great help to solve the problem of iron mine industry survival. This year's taxes and fees to further reduce the transformation for iron and steel industry development, and provides an important opportunity out of the woods.


At 8 o 'clock the first is the "advance" area all the way "construction, expand international cooperation capacity, drive equipment, technology, standard, service, go out and make gold brand made in China". One Belt And One Road regional development will bring along the regional construction industry industry opportunities, vast Eurasia, the region and the national steel production with Chinese basic is not in the same level. If the future all the way smooth implementation strategy, there is a shortage of regional steel is a big probability event, a large number of products is expected to iron and steel industry with export, the current relative surplus of huge capacity is no longer a primary problem of the industry.


China merchants securities pointed out that, taken together, the supply side of the powerful combination of off and pull the palm of the demand side, may change the pattern of supply and demand of iron and steel industry, its fundamental reversal.