At present, the domestic valve is a mix of fish and dragons, according to their own needs of the purchase, such as the quality of sewage treatment is almost selected, the price is remote, the cast iron can be, and installation and debugging is not on the line, life in hand? White embroidered steel or copper. Overall, the operating environment of China's valve market in the second half of 2010 is an opportunity and a challenge coexist, and price bullish and bad factors coexist and continue to develop in the direction of warming up.
First, domestic and foreign demand continues to flourish
Since the beginning of this year, China’s valve demand has maintained a strong growth trend. In the first four months, China's valve consumption index increased by about 30% year-on-year. In April, China's Manufacturing Purchasing Managers Index (PMI) industry index, the metal industry, electrical machinery and equipment manufacturing, general equipment manufacturing industry index exceeded 30%, reflecting these industries as the overall demand for valves, "leading ".
From the data indicators of some major domestic steel consumption industries, from January to April, the total investment in urban fixed assets increased by 26.1% year-on-year, and the growth rate continued to increase. The output of domestic valves was 6.22 million units, a year-on-year increase of 62%, and also showed a very high level of growth. Others, such as industrial boilers, metal cutting machine tools, civilian steel ships, etc., have all experienced significant growth, which has significantly accelerated over the previous year.
From the perspective of foreign trade exports, this year's global economic recovery environment, the rising market prices, has stimulated a sustained increase in China's valve exports. According to customs statistics, from January to April, the national export volume of valves was 13.02 million tons, an increase of 98.8% over the same period of last year. Among them, 4.11 million tons of export valves were exported in April, a month-on-month increase of 29%, more than two times year-on-year, and the monthly export volume hit a new high after the financial crisis. Among the major valve products, the export of sheet metal in April was 2.8 million tons, an increase of nearly 5 times year-on-year; the export volume of bar materials was 430,000 tons, an increase of more than three times. The export volume of section steel is 250,000 tons, which is more than doubled.
Even if affected by the withdrawal of economic stimulus, the consumption intensity of China's valves in the second half of the year has weakened, but its continued strong growth will not change, and the overall valve consumption index remains at a relatively high level. Baosteel, the leading domestic enterprise, also reflected that currently the orders of various downstream industries are full. Although the automotive industry's demand has declined slightly, it has eased the contradiction in the supply of steel for automobiles in the early stage. According to industry sources, the export order status of valve companies is good, and priority is given to export orders. According to the export data measured in the first four months of this year, China's valve export volume may be close to 40 million tons for the year, an increase of about 50% or even more than the previous year, greatly higher than previously expected.
Second, the stimulus policy exit caution
In the second half of the year, what is the demand environment for China's valves? What is the national policy? What is the national policy? There is no doubt that with the improvement of the economic situation at home and abroad, and stabilization, to prevent the economy from overheating, we have to take precautions against inflation. Economic stimulus policies will gradually exit. However, judging from the current situation, due to some uncertainties in economic development at home and abroad, the withdrawal of national stimulus policies will be very cautious. Under normal circumstances, the second half of the year will continue to implement a proactive fiscal policy and a moderately loose monetary policy. At the same time, we must grasp the direction, intensity, and pace of macroeconomic regulation and control. In particular, we must prevent the adverse effects of the superposition of multiple policies and always keep a reasonable grasp of policy efforts. .
In terms of monetary policy, the central bank is expected to use more quantitative monetary policy adjustment tools such as adjustments to the reserve requirement ratio. For price-type tools such as raising interest rates, the central bank will be cautious and cautious. Even if interest rates increase, it is estimated that they will wait until European and American countries wait until prices rise very high, and that once the efforts will not be great, be as mild as possible to avoid a major impact on investment and industrial production.
In terms of bank credit, the balance of financial institutions in April this year stood at 43.35 trillion yuan, an increase of 21.96% over the same period of last year. Although the year-on-year decline, it was 0.15 percentage points higher than the end of last month, indicating that the central bank's credit supply exceeded expectations. , and did not receive very tight. It is expected that such a fine-tuning strategy will continue to be implemented in the second half of the year, and the increase in the credit supply of financial institutions will continue to be significant. There will be no sharp contraction in the year-on-year period.
In particular, it is necessary to point out that as an important part of the exit policy, the state has weighed heavily on the control of real estate and restrained its price from being excessively fast and excessively rising. For the valve market, it is actually a bullish factor.
Specific analysis of the state's regulation and control of real estate "shrinking" content, summed up there are two main: First, resolutely crack down on the land, idle homes have not shot the land, free to recover; second is to limit multi-suite purchase, squeeze speculation foam. The previous measure will stimulate new construction areas and promote construction; the latter measure will drive down prices, increase the purchasing power of the unit currency, and ultimately allow more residents to buy a house, which will also stimulate more housing sales and housing construction. From this it can be seen that no matter what the content, it will promote the construction of housing construction. According to statistics, in the first four months of this year, the construction area of ​​real estate development enterprises in the country increased by 31.7% year-on-year; the area of ​​new housing starts was 457 million square meters, an increase of 64.1% year-on-year, and the state's control measures are showing results.
If the state regulates and controls the real estate industry, it will eventually stimulate the increase in new construction area and increase the construction volume, which will increase the consumption of valves. Well, for the valve market, this is certainly a bullish factor.
Third, new cost factors appear
After entering the second half of the year, Chinese valve companies will face higher production costs. The higher cost factor will emerge from three aspects: First, the relatively low-priced iron ore imported and stored in the earlier period is basically depleted, and the higher price of iron ore will start to face. The valve companies will enter a period of real high production costs. The second is that the quarterly pricing of iron ore indicates that the iron ore agreement price will converge to the spot price. Since the current spot price is significantly higher than the agreed price, it also means that the price of iron ore consumed by valve companies will increase in the second half of the year, and the increase will not be too small. Third, in addition to the agreement that iron ore prices continue to rise, coke prices that affect the cost of China's valves will also rise significantly. Due to the expected recovery from the global economy and the impact of China's economic acceleration environment, the southwestern drought has caused an increase in thermal power generation, and coal product prices will be operating at high levels during the year, and further increases may not be ruled out. The relevant authorities recently issued the warning that coal supply may tighten again in the second half of the year. According to relevant information, domestic coke-producing provinces such as Shanxi, Hebei, and Shandong have recently held coking industry market analysis meetings. Under the situation that coking coal prices have caused costs and coke products prices to hang upside down, the five major coke producing areas have reached a tacit understanding of limiting production insured prices. . After the price increase in May, the price of coke in major producing areas will exceed 2,000 yuan/ton. Affected by this, in the second half of the year, coke market prices will increase rapidly, which is bound to become a new cost increase factor for valve companies. In addition, if the country raises its electricity and water prices in the second half of the year and introduces environmental taxes, it will further increase production costs.
Higher production costs have created new support for valve prices. From the current price of hot-rolled products such as rebar, it is no longer possible to cover new cost factors for future high-priced materials, and market prices must be adjusted.
Fourth, capacity release is inhibited
While domestic and foreign demand continues to grow strongly, the release of China's valve production capacity will be restrained by three aspects.
The first is the suppression of the capacity already put into production. From the perspective of crude steel, the country’s crude steel production in the first four months of the year totaled 213.87 million tons, up 25.4% year-on-year, and was estimated at 640 million tons on an annual basis. According to the current 700 million tons of crude steel production capacity, the capacity utilization rate has reached 91.4% belong to the internationally recognized tight supply level. It is expected that even if China's crude steel output continues to grow in the future, it will not be much higher than the monthly production level of 55.4 million tons in April this year. It should be said that the crude steel capacity that has already been put into production is basically released. Although the year-on-year increase will be higher, there is little potential for growth in the second half of the year.
Followed by the iron ore supply restrictions. The tight supply of iron ore will become the biggest constraint to the release of China's valve production capacity. In 2009, in addition to China, the world's major steel-producing countries have reduced their valve production, so more than 100 million tons of affluent iron ore are exported to China and are digested by Chinese valve companies. This situation will cease to exist this year. As the recovery of the world economy stimulates the production of valve companies in Europe, North America and East Asia, there will be a possible supply gap in global iron ore in 2010. Due to the long-term coal mine destruction in some Chinese valve companies in 2009, this year may face the “bottleneck†of iron ore. The tight supply of iron ore will undoubtedly restrict the release of China's crude steel production capacity.
Again, the power supply is limited. The tight supply of coal and other energy sources will affect the electricity supply. In the second half of the year, there may be restrictions on electricity in some parts of the country, and valve companies, especially small and medium-sized valve companies, will bear the brunt of energy consumption in all regions. The lack of electricity supply will also limit the release of some of the valve's production capacity.
Eliminate backward restrictions. According to recent news, the state must use its “iron hand†to eliminate outdated production capacity, including the three ministries and commissions to cancel the preferential price of electricity for high energy-consuming enterprises such as electrolytic aluminum and valves, and implement price increases for eliminating and limiting production capacity. All these measures should have some effect on the limitations of outdated valve production capacity. With the demand continuing to be strong, the backward production capacity of the valve will be inhibited, which will help improve market relations.
V. Market prices bottomed out
Since April and May, domestic valve prices have experienced periodical corrections, mainly due to the country’s heavy suppression of excessive price increases and the panic in the euro zone debt crisis, as well as the continued rise in early-stage valve prices and the accumulation of a large number of “floating profitsâ€. The psychological and practical operation of the “businessmen and investors†has not caused any change in the fundamentals of strong demand and cost support. Therefore, after the adjustment, the price of valves in China will bottom out and continue to operate at a high level. It is expected that the price of the Shanghai Rebar ** main contract will be around RMB 4,000/tonne in the near future, and it will rebound to around RMB 5,000/ton, with a profit margin of close to 1,000 points.
6. Significant increase in profits of valve companies
The bottoming out of the valve price, even further increase, and the increase in output will inevitably increase the profitability of valve companies. According to the data released by the National Bureau of Statistics, in the first quarter, the profits of 38 industries rose from the same period last year in 39 industrial categories. Among them, the profits of the valve industry increased 338 times year-on-year, with the most significant increase. The industry is generally worried that due to the doubling of iron ore prices, the large loss of the valve industry did not appear.
Although the year-on-year increase in valve company profits in the first quarter was highly related to the low base last year, the profit was still significantly higher than expected. It is estimated that thanks to the substantial increase in prices, the profits of Chinese valve companies in the first half of the year and the whole year will increase significantly. For instance, the company’s accumulated net profit for the first half of 2010 is expected to increase by 6 to 10 times compared with the same period of last year.
It is expected that the overall profit level of valve companies in the second half of the year will be significantly higher than the level of the same period of last year. The increase in the cost of iron ore and other costs will not cause a large area loss for valve companies.