Abstract: Many places across the country to pull the power limit, iron and steel enterprises have limited production and production, involving more than 80 enterprises, according to the current existing data estimates, the impact of output may exceed 3 million tons.Superimposed coarse steel reduction policy, the fourth quarter heating season environmental protection production limit, the Winter Olympics air control, it is expected that the fourth quarter supply side will continue to tight situation.

Power rationing not only affects steel enterprises, cement enterprises and downstream steel enterprises have also stopped production, or will lead to later downstream demand contraction.Or there will be a double weak supply and demand pattern, the supply side shortage is easier to measure, the price wide shock is strong, to show weak demand, may drag down steel prices.

1. Background of power restriction

According to the statistics of electricity generation and power consumption from January to July 2021, the accumulative power generation from January to July is 464.49 billion KWH, and the accumulative power consumption from January to July is 470.97 billion KWH, with a cumulative shortfall of 64.71 billion KWH.The industrial sector, which accounts for 71% of the country's electricity consumption, was among the first to be hit by the cuts.

Second, the impact of power rationing on steel industry

The iron and steel industry accounts for about 10% of the total social electricity consumption, and the impact of power rationing on steel output is more serious.In 2010, for example, steel production fell and prices rose by more than 15% during the blackout.

More than 20 provinces and cities have been affected.According to incomplete statistics of the Steel association, more than 80 steel enterprises are involved.Due to the resumption of some steel production time has not been determined, according to the current regional has announced the phenomenon of enterprise production estimates, the impact may be between 3 million to 4 million tons, do not exclude the scope of production limits continue to expand, the impact of production may continue to increase.

According to the requirements of the Ministry of Industry and Information Technology, 2021 crude steel production year-on-year decline target, combined with the national crude steel production from January to August than the same period last year is still increased by 44 million tons, deducting the output reduction caused by the production limit in September, the fourth quarter reduced output will still exceed 10 million tons, the supply side will continue to present a tense situation.At present, only Tianjin and Hebei province crude steel production year-on-year decline, and the two areas of the decline is expanding.From the data comparison, production in some areas in August declined significantly, the year-on-year growth from January to August fell significantly.But year-on-year growth from January to August was more than 20% in many places.In addition to Hebei, jiangsu, Shandong, Liaoning and Shanxi, the five major steel-producing provinces, saw year-on-year growth rates of 5-9%. Jiangsu and Shandong saw a large decline, and output will continue to decline in the fourth quarter.

Three: the impact of power rationing on downstream demand

The cement industry accounts for about 3.5% of the electricity consumption in the whole society, and cement enterprises in some areas have been notified of the deadline and limited production accordingly.The decline in cement production is likely to affect the amount of concrete, and the decline in cement will lead to price increases, resulting in higher project costs, affecting the progress of the project.This in turn caused a drop in demand for rebar.

This round of power restrictions, not only on the supply capacity of steel production enterprises, for downstream steel enterprises also have an impact.Home appliances, shipbuilding and other manufacturing industries are reported to have shut down to varying degrees.

Four: late price trend prediction

Due to power rationing, both the steel industry itself and downstream enterprises have been affected to a certain extent. At present, the supply impact on the steel industry is relatively visible, but the impact on the demand side may not be intuitive, and the supply and demand pattern may show both weak supply and demand.

In addition, the fourth quarter also superimposed autumn and winter heating season environmental production limits and the end of the Winter Olympics held atmospheric control.According to the ministry of Environment and Ecology in the early consultation plan, this autumn and winter air control area in the original basis on the increase in northern Hebei, Northern Shanxi, eastern and southern Shandong, southern Henan.Overall, the supply side in the fourth quarter will show a more obvious tightening trend.

Because the impact of the supply side is relatively easier to measure, and the reduction of crude steel production policy has not yet reached, but also a larger reduction space, so the supply side of the price more direct impact, demand side weakening performance or will have a certain time lag, steel prices are expected to show a wide shock strong.Wait for weak demand performance, may drag down steel prices.