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The Chinese steel industry is facing double squeezes of excess production capacity and the global economic crisis. Some recent steel industry experts pointed out that although the market has great expectations for the second quarter rebound of steel prices this year, the long-term supply exceeds the demand in the industry. Intermittent production cuts will become an important feature of the steel industry this year.
According to the Securities Times’ report on the 14th, industry experts have considered various economic data and believe that the declining trend of steel demand is tightening and the chain ratio has improved rapidly. The fourth quarter of 2008 and the first quarter of this year may be the bottom of this cycle, if economic data The rapid improvement of the same period last year, the second quarter will enter the demand recovery phase, the steel market may begin to rebound in the late second quarter.
In spite of this, the expert also stressed: "The main contradiction in China's steel market this year is that supply is greater than demand." He gave reporters several such data: First quarter crude steel output was at a level of 500 million tons in the year; exports fell sharply, 1 - Exports of 3.44 million tons in February, equivalent to 21.3 million tons of steel exported throughout the year, a decrease of 64% from the 5918 tons in the previous year. "Social steel stocks have risen sharply, creating a lot of pressure on the domestic market. We are currently digesting steel. Plant stocks appear to increase their signs."
"China has a huge support policy of expanding domestic demand, there will be a rebound." Another analyst pointed out, but in the context of the global economic recession, world steel production will have fallen sharply; China due to the impact of the decline in exports, the situation is not optimistic. The country’s steel revitalization plan is also focused on total control. Therefore, the domestic 660 million steel production capacity will face a serious surplus. In the event that steel companies are unlikely to uniformly limit production or reduce production, long-term oversupply and intermittent forced production cuts may become a major feature of the steel industry in 2009.
Regarding the reasons for the above situation, the expert believes that, first of all, the international financial crisis is still spreading and deepening, the international financial market is still in turmoil, and the national economy is plunged into recession. The global demand for steel products will be significantly reduced compared with last year; Due to the impact of the international environment, China's economic difficulties this year will increase significantly. Imports and exports will decline sharply from last year, industrial production will slow down, and the demand for steel products in the domestic market will decrease significantly from last year; again, China’s steel production capacity is greater than the demand at home and abroad. Under the condition of shrinking demand, reducing production and adjusting structure have become the key to balance supply and demand, and the key to preventing the ups and downs of the market; finally, iron and steel enterprises are facing resistance to cut production. Enterprises should fully consider the loss of benefits brought about by the suspension of production and rehabilitation, and weigh the advantages and disadvantages; companies are reluctant to lose their existing market share; local governments do not want companies to stop production.