Recently, environmental protection and other policies have been frequent. In this Tangshan area survey, we visited steel mills, steel traders, and consulting companies, and conducted in-depth discussions on issues related to environmental protection, production, and demand. The special summary is as follows.

Core point of view:

1. From the downstream terminal of steel, the profit of cold-rolled sheet is relatively weak, and the order quantity is quite different from that of previous years. On the one hand, due to weakening demand, automobile sales are increasing but the growth rate is slowing down, and production is also affected by environmental protection; On the one hand, it is cut by the market share of competitors such as Japan Steel (cost advantage), and supply is under pressure. Home appliances are also generally better than car boards;

2. The overall demand for this year was delayed by about one month. In July, orders were basically full, but the speed of orders decreased, which also reflected that seasonal demand began to fall.

3. Recently, Tangshan has completely eliminated blast furnaces below 1000 cubic meters in 2020, and gradually eliminated blast furnaces below 1500 cubic meters. It was proposed by Tangshan Economic and Information Committee, but there are no official documents yet. The company has no specific actions and plans at present. According to the quantity, the blast furnace below 1000 cubic meters in Tangshan area accounts for 45%, and the blast furnace below 1500 cubic meters accounts for 87%;

4. The regional strip steel has been completely banned, with an output of about 10 million tons. At present, there are 4 electric furnace enterprises that can be produced in Tangshan, and the total capacity is 3 to 4 million tons, like Jinzhou is put into operation in July;

5. "Blue Sky Defence War" indicates that the environmental protection policy is gradually tightening, and the scope, industry and strength of production restrictions are expected to continue to expand. The ultra-low emission transformation standards in Tangshan area are currently considered to be the most stringent. The steel mills in Tangshan are carrying out environmental renovation construction. The investment cost depends on the technology of tens of millions to more than one billion, and will be accepted at the end of October. Construction will not affect production and will be discontinued for up to one week at the time of final installation. However, according to the feedback from the company, it is difficult for the technology to meet the set environmental protection standards. At the same time, the transformation time is urgent. Once the acceptance is unsuccessful, it will face the risk of suspension of production and rectification;

6. Tangshan has just issued the “Implementation Plan for Deep Reduction of Iron and Steel, Coking Super Low Emissions and Coal-Fired Power Plants”, and proposes enterprises that have passed the acceptance and stable to achieve ultra-low emission standards before the end of October 2018, and are exempted from the heating season before 2019-2020. Limit peak production or reduce production time;

7. At present, the traders' mindset is relatively calm, the price fluctuations are moderate, and the transactions are carried out in an orderly manner. The position of spot profit of 1200 yuan / ton or more is prone to high fears, and will believe that excessive profits are not sustainable.

Q&A session summary

Q: What is the prosperity of several terminal industries corresponding to the sheet?

A: I feel that the car is worse now. The cold rolled order volume is much worse than in previous years. On the one hand, the demand should be weakened, the car sales volume is increasing, but the growth rate is slowing down. On the other hand, it is also affected by Japan Steel (cost advantage). The market share of competitors is squeezed. Home appliances are also generally better than cars.

Q: Is the automotive industry affected by environmental protection?

A: There are also many environmental protection involved, such as pickling, painting, etc., especially the paint tube is particularly strict, the small paint factory has basically fallen, and the large formal control.

Q: What is the export situation?

A: The export is OK. It is similar to last year. It has not increased or decreased. After all, the market in the United States is relatively small.

Q: There are some phenomena that are not light in the off-season. Does the appliance seem to have an abnormal anti-seasonal growth?

A: It is not the growth of short-term demand. The overall demand for this year has been extended by one month, and the peak season is all. Normally, seasonal demand in July will weaken, and by mid-August the amount should start.

Q: What is the order status?

A: The order is ok, the order is basically full in July, but the speed of the order has decreased, which also reflects the fall in seasonal demand.

Q: Some time ago, Tangshan City eliminated all blast furnaces below 1000 cubic meters by 2020, and gradually eliminated blast furnaces below 1500 cubic meters. Does the local steel enterprises have specific plans?

A: There is no specific plan yet.

Q: Please introduce the distribution of blast furnaces in Tangshan area.

A: According to the quantity, 45% below 1000 cubic meters and 87% below 1500 cubic meters.

Q: This is not an official document.

A: No, it was proposed by the Tangshan Economic and Information Committee.

Q: What is the current production capacity in Tangshan?

A: There are currently 35 blast furnace enterprises in Tangshan, with a production capacity of about 110 million tons and a production of less than 100 million tons. According to the statistics of Tangshan Statistics Bureau, the crude steel output in January-May has reached 50 million tons.

Q: Did Tangshan have a strip of steel before?

A: Yes, there have been many before, and all of them have been destroyed last year, with a production of 10 million tons.

Q: Is the electric arc furnace put into production?

A: Like Golden State, which was put into production in July, the equipment is more of a conversion (there was equipment but it was classified as a strip steel). At present, there are 4 electric furnace enterprises in Tangshan that can produce a total of 4 Zhengfeng, Huajun, Shoutangbaosheng and Jinzhou, with a total capacity of 3 million to 4 million tons.

Q: What progress has the company made in moving to the coastal area?

A: There is no clear plan yet, and there are no changes in personnel.

Q: What is the impact of limited production on steel companies?

A: It has a great influence on pig iron. From January to May, the output of pig iron decreased by 11% year-on-year, and the output of crude steel decreased by 3%. In our statistics, the current operating rate of Tangshan blast furnace is 82%, the average of 5.6 months is 82.6%, the highest is 84%, and the average annual average is 90%. At present, there is no restriction on the completion of the rolling line production.

Q: Xuzhou has delayed resumption of production. Do you know?

A: According to our understanding, some steel mills say that they can produce normally, but there are also one or two. Others say that they have not passed the acceptance test, and they will continue to extend the production stoppage time.

Q: The "Three-Year Action Plan to Win the Blue Sky Defence War" proposes that the scope of production restriction should be expanded, but the documents seem to be very vague. It is not clear how the specific implementation will be carried out. How do you analyze it?

A: The national environmental protection policy is gradually tightening. The scope, industry and strength of production restrictions will continue to expand. Steel mills are constantly making adjustments, including Tangshan plans to invest about 10.7 billion construction enterprises for railway lines and steel lines with railway lines. They are all docked and rely more on railways for the transportation of raw materials. Railway transportation is to solve the pollution problem of motor transportation. The cost of railway transportation will increase by 40 yuan/ton compared with the highway, because the construction cost of the railway, including the land occupation cost, is invested by the steel mills, which is about 50 million kilometers per kilometer, and the difference does not need more than 10 billion. Some factories are farther away from the main track and may be more difficult. Moreover, the ownership of the railway was the state, and the railway was transferred. Before the city, it had been meeting and said that it would be completed by 2020. This is also related to the limited production. If the steel mill is successful, the ratio of production to the heating season may be reduced as appropriate.

Q: What is the specific acceptance criteria?

A: Each province is different. Tangshan is the most stringent, including emissions from various stages such as sintering machines and converters. The original standard of the sintering head is 20 mg/Nm3 of flue gas particulate matter, 50 mg/Nm3 of sulfur dioxide, and 100 mg/Nm3 of nitrogen oxide. The standard is now nearly half, and the acceptance criteria are smoke particulate matter 10 mg/Nm3, sulfur dioxide 35 mg/Nm3, and nitrogen oxide 50 mg/Nm3. Other regions should not be so strict, and Tangshan should be the strictest in the country. The steel mills in Tangshan are doing in-depth renovations and investing a lot. According to the feedback from the company, I still feel that there is no mature technology. This time everyone is also trying it out. Like the three sintering machines in Jinxi, three manufacturers are selected to transform and see which one works well.

Q: What is the cost of ultra-low emission retrofit?

A: Expensive, like a 200 cubic meter of a sintering machine transformation investment will have about 1.3 billion, using active coke, the most expensive, the effect is better than others. Equipment with poor technology, 30-50 million can also be completed. Some are willing to pay a big price, and they will have to be eliminated after one or two years, not as good as once, once and for all.

Q: What is the progress of the environmental protection equipment of various steel mills?

A: The documents issued in February this year require the implementation of ultra-low emission reform, requiring construction before the end of May and acceptance at the end of October. At present, the construction is basically in the construction state, the construction will not affect the production, and at most, there will be some impact when the equipment is docked at the end, and the installation may stop for a week or so.

Q: In the previous period, Henan Province issued documents. For steel enterprises that have reached the ultra-low emission limit before the end of October 2018, the peak heating season will not be implemented in principle in the 2019 heating season. Is there a similar situation in Tangshan?

A: Tangshan has just issued the “Tangshan City, Coking Super Low Emissions and Coal-fired Power Plant Deep Reduction Implementation Plan”, which proposes enterprises that have passed the acceptance and stable to achieve ultra-low emission standards by the end of October 2018, and are exempted from the heating season before 2019-2020. Limit peak production or reduce production time.

Q: This is equal to raising the threshold in disguise. Some of them can't build a railway and they will be eliminated.

A: Yes, just like the recent policy, it is impossible to directly eliminate the number of steel enterprises. It is definitely a disguised form. By increasing the environmental protection standards and other policies, you will be allowed to withdraw by itself. After all, there are more private enterprises.

Q: What is the reason why the thread operating rate is only 40%?

A: The profit of the billet rolling enterprises is relatively low, and the production is not much. The most unprofitable in Tangshan area is the profile. The operating rate is only 39%. If the operation is not good, it may be upside down for 20~30 yuan, and the maximum time is 50 yuan.

Q: Is there any significant change in the scrap ratio in Tangshan recently?

A: It was 27%-28% higher than the previous year, and currently 20%-25%.

Q: What is the cost of molten iron?

A: The current research situation shows that the cost of molten iron is about 2100-2150 yuan, the billet is increased by 500-600 yuan, the strip is 200-300 yuan higher than the billet, and the foundry fee is 100.

Q: How about the transformation of the coking plant? Current capacity?

A: Tangshan needs to be accepted at the end of September. More is desulfurization, denitrification and de-whitening. The pressure on the enterprise is smaller, and the production capacity is more than 30 million.

Q: What is the current inventory level of steel mills?

A: About 1 week of coke, iron ore 7-15 days of steel mills accounted for 54%, 16-30 days of 32%.

Q: How do you see the change in output after the meter is transferred?

A: It cannot be said that the total output of the strip steel is reduced. The scrap steel is banned by the long process and the electric arc furnace is consumed. The scrap price is also rising, and the operating rate of the blast furnace is reduced, but the utilization factor is increased. The utilization coefficient of the large blast furnace (2000-3000 cubic meters) is generally 2-3, the raw material requirements are very high, and the 450/550 cubic meter blast furnace is the most economical and should not be blindly sought.

Q: What changes have been made to the use of iron ore in steel mills?

A: Steel mills do not simply pursue the best iron ore in 2016/2017. At present, from the perspective of economic application, they are replaced by Nabba and Jinbuba. Under the oversupply of high stocks, the elasticity of subsequent mineral prices is getting smaller and smaller.

Q: What is the mentality of traders under current prices and profits?

A: The trader's mentality has several times in the position of spot profit of 1,200 yuan / ton above the fear, that excessive profit is not sustainable. In the past, steel prices could be seen at 5,000-6,000 yuan because of high raw material prices. At present, the price of coke is 2000-2500, even if the price limit is 3,000 yuan, the cost is only 1,500 yuan. In 2008, iron ore was 1,500-1,700 yuan / ton, currently only 400 yuan.

Q: What do you think of coke?

A: From the conduction path, it is the change in thread price that is transmitted to coke. Coal coke, steel, iron ore, pricing system is different, iron ore is monthly pricing (Platinum pricing, small sample large market), the price is easy to be manipulated; coal coke is more a game between steel mills and coking plants, pricing may For a long time, the status of the two is currently equal; steel is not the same, pure market pricing.

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