As the crucial year of supply side structural reform in the iron and steel industry, in 2017, various measures to reduce production capacity were continuously promoted, and policies such as banning "strip steel" and releasing high-quality production capacity were successively issued, which had an important impact on the healthy development of China's iron and steel industry. The iron and steel industry has experienced a series of important changes: remarkable results have been achieved in capacity reduction, steel production has increased, consumption has gradually recovered, steel prices have fluctuated upward, and the profitability of iron and steel enterprises has increased substantially.

　　The report of the 19th National Congress of the Communist Party of China pointed out that we should deepen the structural reform on the supply side, adhere to the principle of eliminating production capacity, inventory, leverage, cost reduction, and weaknesses, optimize the allocation of stock resources, expand high-quality supply, and achieve a dynamic balance between supply and demand. In the next 1-2 years, the 19th National Congress of the Communist Party of China will release more and more targeted policies and measures to stabilize growth. The national economy is expected to continue to maintain a steady and positive development trend, infrastructure construction, machinery, automobile and home appliances and other major steel industries are expected to maintain a rapid growth, and steel demand will remain stable. However, in the heating season, environmental protection and production restriction measures have been implemented in some provinces and cities in succession. In the later stage, steel production will be reduced and steel prices may rise, but it is difficult to continue to rise sharply.

　　The year of iron and steel production capacity reduction

　　In recent years, affected by the slowdown of economic growth and sluggish downstream demand and other factors, China's steel industry is facing difficulties and problems such as overcapacity, steel price decline and enterprise benefit decline. In response to the problem of overcapacity in the iron and steel industry, the state has successively issued a series of industrial policies to limit new capacity and increase the elimination of backward capacity. During the national two sessions in March 2017, Premier Li Keqiang proposed in the report on the work of the government that the goal of capacity reduction in 2017 is to reduce the steel production capacity by about 50 million tons. In March 2017, the Ministry of environmental protection issued the work plan of air pollution prevention and control in Beijing, Tianjin, Hebei and surrounding areas in 2017. The "2 + 26" cities need to implement the classified management of iron and steel enterprises, according to the performance level of pollution emission, and formulate the plan of staggered peak and limited production before the end of September 2017. In Shijiazhuang, Tangshan, Handan, Anyang and other key cities, the production capacity of iron and steel in heating season is limited by 50%; The electric furnace and natural gas furnace shall be shut down during the yellow and above heavy pollution weather warning period.

　　It is an important task for supply side structural reform of China's iron and steel industry to eliminate excess capacity and remove backward capacity, which is also a medium and long-term task. According to the target of the adjustment and upgrading plan of iron and steel industry (2016-2020), the contradiction of overcapacity will be effectively alleviated by 2020, and the crude steel capacity will be reduced by 100-150 million tons compared with 2015. In 2016, the iron and steel industry successfully resolved 65 million tons of excess capacity and exceeded the annual target. However, with the deepening of the work of capacity reduction and the increasingly fierce interest game among all parties, 2017 has become the "year of overcoming difficulties" in the eyes of the government. By the end of August 2017, the annual capacity reduction task of 50 million tons had been completed ahead of schedule, and the problem of "strip steel" lingering in China's steel market for a long time had been solved in 2017. As of June 30, 2017, more than 600 "Di Tiao steel" enterprises have been banned across the country. The progress is in line with expectations. The supply structure of the industry has been rapidly improved. According to the five-year plan of 100-150 million tons of steel production capacity, many non major steel provinces have completed the task ahead of schedule.

　　With the continuous deepening of steel production capacity, China's environmental protection, production, quality and other industrial policies are increasingly strict. As a result, the investment in fixed assets in the steel industry has declined significantly year on year.

　　In terms of production, under the stimulation of high profits, the capacity release of steel enterprises accelerated in 2017. In the first three quarters, the output of pig iron, crude steel and steel all kept increasing. However, with the continuous increase of the price of raw materials such as coking coal and coke, and the approaching of production limit in heating season of North steel plant, the enthusiasm of steel plant for replenishing raw materials decreased, and the production of steel plant slowed down in the later period.

　　In terms of consumption, affected by the slowdown of domestic economic growth, the transfer of industrial structure from the second industry to the third industry, and the decline of manufacturing boom, the downstream demand of the steel industry slowed down. From the perspective of macro data, as the main consumption of steel, fixed asset investment continued to maintain a slight slowdown in September 2017. Benefited from the rapid growth of real estate de stocking and infrastructure investment, the increase of infrastructure investment in 2017 played a supporting role in steel demand, but the upgrading of the real estate market purchase restriction had a certain inhibition on steel demand.

　　Industry profitability continues to rise

　　With the improvement of steel production capacity reduction, environmental protection and production restriction, and market demand, domestic steel prices have recovered. In 2017, China's steel prices fell and fluctuated under the strong downstream demand, the influence of "strip steel" removal, environmental protection and other supply policies. The operation of steel prices can be roughly divided into three stages: the first stage is driven by the demand at the beginning of the year, with an obvious rise. Due to the good start at the beginning of the year and the strong demand for replenishment, the steel price rose rapidly in 1~3 months; in the second stage, the logic of strong industry and the expectation of weak macro saw saw saw, and the steel price fluctuated at a low level after the correction in April; In the third stage, the recovery of macro expectations combined with strong industry fundamentals made steel prices rise rapidly from July to September and hit a year high, then fluctuated at a high level.

　　Since 2017, China's supply side structural reform has continued to push forward. The steel industry has achieved remarkable results in removing production capacity and banning "strip steel". The release of advantageous production capacity has accelerated. As a result, the market space created by eliminating excess production capacity, clearing up "strip steel" and limiting production by environmental protection has been eliminated. Through compliance enterprises, production has been increased and reduced