The logistics of the steel industry entered mid-April to open signs of recovery. In the 20 days prior to this, data from relevant platforms showed that the logistics of the steel industry showed a ringgit decline.
On April 11, the State Council issued a joint prevention and control mechanism, requiring “no arbitrary restrictions on the passage of trucks and drivers and passengers”, followed by a ringgit rise in the logistics index in mid-April. However, the recent fluctuations in the steel and other freight flow indices also show that the national logistics recovery has not yet fully stabilized.
Steel is a bulk commodity widely used in real estate, infrastructure and manufacturing. in March 2022, China’s crude steel, pig iron and steel production fell 6.4%, 6.2% and 3.2% year-on-year, respectively. industry analysts believe that multiple factors such as heating season production restrictions, recurring epidemics and restricted logistics and transportation have combined to affect steel production in March. immediate industry tracking indicators show that steel capacity release as well as logistics All in the process of pressure back up, but by the downstream demand suppression, logistics blockage and the impact of the high cost of raw materials, the current market is still in the supply and demand of two weak situation.
For the downstream market of steel, Lange Steel analysts believe that even if the recent policy side continues to promote, but the impact of the epidemic terminal demand is still slow to start, demand, consumption in a short period of time is difficult to completely change.
Logistics in recovery
SteelNet’s Fat Cat Logistics Commodity Index shows that from April 11 to April 20, the steel transportation industry trading merchant index was 127.0, an increase of 13.8 points over the previous decade. The average household tonnage index was 197.9, 26.5 points higher than the previous month, and the average household transaction amount index was 196.8, 32.1 points higher than the previous month.
The so-called trading merchant index refers to the number of carriers within a certain time frame on the logistics platform, and this index mainly reflects the number of active customers. The average tonnage and the average value of transactions per household refer to the tonnage and the price of transportation of a single user on the platform in that time frame.
From some other data provided by the above-mentioned platform, in the late March and early April just passed, the steel transportation industry trading merchant index, the average number of tons traded per household and the average amount traded per household all showed a significant year-over-year decline until they rebounded again in mid-April.
Steel Finder introduced to the Economic Observer that 5 regions of the country, except for East China, have a trading merchant index of more than 150, which is 2 more than the last ten days; among them, Southwest China exceeds 170, and the highest Central and Western region in the last ten days is down 13 to 150 this ten days; North China rises 38.1 points to 155.1; Southwest China, South China and East China increase 16.1, 13.2 and 17.1 points respectively. East China was more affected by the epidemic, with a trading merchant index of 96.0, down slightly compared to January, but also up by 17.1 points compared to the first half of the year.
As one of the industrial bulk commodities, steel is closely related to the overall demand changes in real estate, infrastructure and manufacturing. WAND data show that from April 1 to April 20, the whole truck freight flow index fell from 101.81 on April 1 to 97.18 on April 7, and has since rebounded to 114.68 on April 18, but the index fell again from April 19, which also seems to imply the instability shown by the current logistics recovery situation. For example, Shanghai and Jilin Province’s freight flow index on April 20 only showed 16.66 and 26.8 respectively, while the index was still above 100 points two days ago, and Beijing and Jiangsu also showed significant volatility in logistics.
From a year-on-year perspective, the national freight flow index was 86.28 on April 20, down 24.97% from the same period last year.
Yang Yijun, managing director of Steel Finder, told the Economic Observer when analyzing the recent logistics performance of the steel industry that the national logistics and transportation indices fluctuated significantly from March to April, with significant regional differences, and the overall trend was still up in April. Affected by the epidemic control policy and rising oil prices, steel transportation in March and April has been difficult and expensive to find a car. Among the five major regions of the country, East China ranked the bottom in all indices. The core city of East China, Shanghai, and the lines in and out of Shanghai were halted on a large scale, and there was a significant drop in inter-city transportation and intra-city short barges in other provinces and cities, which was also the reason for a certain decline in trading merchants.
Yang Yijun said that not only the difficulty of finding a car, capacity control policies have also led to a significant increase in the length of each single transport fleet, the key control areas of the terminal sub-terminals customer transport costs have also risen sharply, especially in the Central and Western region mostly for long-haul transport, the average household transaction amount index rose more significantly.
Yang Yijun said, with the improvement of the epidemic, control policies are also gradually liberalized, April 11, the State Council issued a joint prevention and control mechanisms, requiring “no arbitrary restrictions on the passage of trucks and drivers and passengers”, with the gradual implementation of this decision, in mid-April, the indices are up from a year earlier. Among the five major regions monitored by the agency, the steel transportation in North China has taken the lead in picking up, with the indices in the leading position and rising fast. Yang Yijun believes that with the improvement of the epidemic, the supply chain in other regions will also gradually unblock and show a significant upward momentum.
The data of the rebound in logistics is also verified by the steel inventory data. Take construction steel as an example, find steel network monitoring inventory data show: this week’s building materials inventory of 12.025 million tons, down 3.16% from last week; building materials apparent consumption of 4.1464 million tons, up 20.49% from last week, table demand ring up significantly.
Supply and demand are weak, demand to be opened
On April 18, the National Bureau of Statistics released data showing that in March 2022, China’s crude steel, pig iron and steel production fell by 6.4%, 6.2% and 3.2% year-on-year, respectively; from January to March 2022, China’s crude steel, pig iron and steel production fell by 10.5%, 11.0% and 5.9% year-on-year, respectively. Meanwhile, in the first quarter of 2022, manufacturing investment grew 15.6% year-on-year, infrastructure investment grew 8.5% year-on-year, and real estate development investment grew 0.7% year-on-year.
Ge Xin, an analyst at the Lange Steel Research Center, believes that in March 2022, due to the combined effects of multiple factors such as the lifting of production restrictions and limitations during the heating season, recurring epidemics and restricted logistics and transportation, the capacity release of domestic steel producers showed a pressurized rebound.
In April, the domestic steel market should be in the traditional peak season, but due to the repeated epidemic and logistics and transportation restrictions, steel mills are facing the double pressure of raw material transportation and finished steel factory transportation restrictions, forcing steel producers to show a short time pressure on the release of production capacity. According to the research data of Lange Steel Network, the blast furnace start rate of 100 small and medium-sized steel enterprises in the first three weeks of April 2022 was 80.9%, up 5.3 percentage points from March. With the loosening and tightening of the epidemic control, the blast furnace start-up rate showed a slight rebound.
Post time: Dec-28-2022