Wu Qiong said the forecasts were based mainly on two of the most important reasons:One is the ongoing strict control of the new capacity policy,Second, the start of rural economic construction (including infrastructure), coastal infrastructure is now close to saturation, but the rural market space is huge.
Capacity Aspects,At the end of 2017, the "Measures for the implementation of steel capacity replacement" (the measures) issued by the Ministry of MIIT clearly stipulated that new capacity should be strictly prohibited,The measures clearly stipulate that no matter what the nature of construction projects are new, alteration, expansion or "off-site overhaul",As long as the construction content involves the construction of ironmaking, steelmaking smelting equipment,The existing capacity must be replaced in strict compliance with the "one must" and "6 not" principles set out in the measures.
If compared with China's steel industry over the past few years, it can be seen that 2012 to 2015 is a depression period, the end of 2015 to the end of 2016 is the recovery period, 2017 is still in the boom.
But Wu Qiong also cautioned that while the two main reasons for strict control of capacity and infrastructure will keep the steel industry booming for at least two years, the laws of the capacity cycle opposite cannot be broken, and a new round of capacity expansion and a recession after the boom is inevitable.(Source: Economic Watch Network)