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Rapid Economic Recovery Gives Confidence in Seamless Steel Pipe Demand
May 23, 2020
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Affected by the outbreak of the global epidemic - COVID-19, investment activities slowed down and import and export of goods also slowed down. What’more, the ex-factory price and purchasing price of industrial products on year-on-year basia and month-on-month basis was dropped a little. All indicates that the demand of seamless steel pipe needs to be further recovered.
According to the data in some parts of seamless steel tube industries in the first quarter, the production of seamless steel tube basically remained stable with little fluctuation. Affected by the outbreak of overseas epidemic - COVID-19, China exported 647.6 million tons of seamless steel tubes in March, 2020. And there was totally 14.286 million tons of seamless steel tubes exporting to overseas from January to March, 2020, which decreased 16.0% on a year-on-year basis. But the decrease rate dropped a little compared with the previous two months. In March, 2020, China imported 85.913 million tons of iron ore and its concentrate. From January to March, 2020, China imported 262.732 million tons of iron ore and its concentrate, which increased 1.3% on a year-on-year basis.
According to the data in some parts of seamless steel tube industries in the first quarter, the production of seamless steel tube basically remained stable with little fluctuation. Affected by the outbreak of overseas epidemic - COVID-19, China exported 647.6 million tons of seamless steel tubes in March, 2020. And there was totally 14.286 million tons of seamless steel tubes exporting to overseas from January to March, 2020, which decreased 16.0% on a year-on-year basis. But the decrease rate dropped a little compared with the previous two months. In March, 2020, China imported 85.913 million tons of iron ore and its concentrate. From January to March, 2020, China imported 262.732 million tons of iron ore and its concentrate, which increased 1.3% on a year-on-year basis.
The iron ore supply remained basically stable, which imported by China's seamless steel pipe industry. According to the data, in the first ten days of April, the inventory of seamless steel tube enterprises was reduced by 0.64% compared with that in the last ten days of March. But it was still at a high level. In the near future, the price of seamless steel pipe fluctuates slightly, which will be dominated by weak consolidation in the short term. In the first quarter, the seamless steel tube industry remained basically stable, making due contributions to the prevention and control of epidemic situation and the overall stability of economic and social development in China. This is inseparable from the efforts of the majority of seamless steel tube enterprises, and also inseparable from the institutional advantages with Chinese characteristics and the coordinated support of the industrial chain.
From the perspective in global, the epidemic - COVID-19 has caused severe damage to the economies of all countries and regions in the world. But China has walked out of the worst period. The economy bottomed out in February and recovered rapidly in March, and the recovery degree is better than expected. The second quarter will be a period of comprehensive economic recovery. The best expectation is to return to the same period last year, or slightly increase. Specifically, the investment is expected to continue to pick up in the second quarter. Because the country has introduced many stimulus policies. In addition, normal economic activity itself is slowly recovering. However, due to the impact of the overseas epidemic - COVID-19, China's import and export in the second quarter may face greater pressure. So, strengthening the stimulation of domestic demand is a priority. In terms of consumption, it is expected that there will be a big rebound in the second quarter. Although the real income of residents in the first quarter decreased, the decline rate is very small, which basically shows a stable state. It will have a good support for the recovery of consumption.
Generally speaking, the speed and scale of China's economic recovery are leading in the world. We can be optimistic about the domestic economic recovery. Considering the uncontrollable and variable situation overseas, the speed and ability of China's economic recovery will be affected. So, Chinese government will continue to introduce targeted policies in three aspects: investment, expanding domestic demand and stimulating consumption, and further boost the economy by mainly focusing on expanding domestic demand.
This point has been reflected in the meeting of the Political Bureau of the CPC Central Committee on April 17. China will respond to the impact of the epidemic - COVID-19 with more powerful macro policies, and do a good job in "six guarantees" (to guarantee the employment of residents, to guarantee the basic livelihood of people, to guarantee the main market player, to guarantee the security of food and energy, to guarantee the stability of the supply chain of the industry, and to guarantee the operation of the grass roots). For example, China will introduce more active fiscal policy, more flexible monetary policy and release policy support for consumption potential, etc.
At present, The reason of the difficulties faced by seamless steel pipe industry are mainly because of the failure of complete recovery of downstream demand, which results in high inventory, low price of seamless steel pipe, slow speed of turnover of corporate capital, decreasing profitability and other problems. However, with the basic interruption of the spread of the local epidemic - COVID-19 in China, the resumption of work and production in the downstream industry of seamless steel pipe is accelerated. The national policy of boosting domestic demand is gradually implemented. Then, the demand for seamless steel pipe will recover rapidly. The recovery of seamless steel pipe industry in the second quarter and the further improvement in the second half of the year are likely events. The industry of seamless steel pipe should have confidence in this.
From the perspective in global, the epidemic - COVID-19 has caused severe damage to the economies of all countries and regions in the world. But China has walked out of the worst period. The economy bottomed out in February and recovered rapidly in March, and the recovery degree is better than expected. The second quarter will be a period of comprehensive economic recovery. The best expectation is to return to the same period last year, or slightly increase. Specifically, the investment is expected to continue to pick up in the second quarter. Because the country has introduced many stimulus policies. In addition, normal economic activity itself is slowly recovering. However, due to the impact of the overseas epidemic - COVID-19, China's import and export in the second quarter may face greater pressure. So, strengthening the stimulation of domestic demand is a priority. In terms of consumption, it is expected that there will be a big rebound in the second quarter. Although the real income of residents in the first quarter decreased, the decline rate is very small, which basically shows a stable state. It will have a good support for the recovery of consumption.
Generally speaking, the speed and scale of China's economic recovery are leading in the world. We can be optimistic about the domestic economic recovery. Considering the uncontrollable and variable situation overseas, the speed and ability of China's economic recovery will be affected. So, Chinese government will continue to introduce targeted policies in three aspects: investment, expanding domestic demand and stimulating consumption, and further boost the economy by mainly focusing on expanding domestic demand.
This point has been reflected in the meeting of the Political Bureau of the CPC Central Committee on April 17. China will respond to the impact of the epidemic - COVID-19 with more powerful macro policies, and do a good job in "six guarantees" (to guarantee the employment of residents, to guarantee the basic livelihood of people, to guarantee the main market player, to guarantee the security of food and energy, to guarantee the stability of the supply chain of the industry, and to guarantee the operation of the grass roots). For example, China will introduce more active fiscal policy, more flexible monetary policy and release policy support for consumption potential, etc.
At present, The reason of the difficulties faced by seamless steel pipe industry are mainly because of the failure of complete recovery of downstream demand, which results in high inventory, low price of seamless steel pipe, slow speed of turnover of corporate capital, decreasing profitability and other problems. However, with the basic interruption of the spread of the local epidemic - COVID-19 in China, the resumption of work and production in the downstream industry of seamless steel pipe is accelerated. The national policy of boosting domestic demand is gradually implemented. Then, the demand for seamless steel pipe will recover rapidly. The recovery of seamless steel pipe industry in the second quarter and the further improvement in the second half of the year are likely events. The industry of seamless steel pipe should have confidence in this.
