Original title: Lange Research: Economic survival is expected to stabilize, can steel demand improve in the beginning of the year?
According to data released by the National Bureau of Statistics today, according to preliminary calculations, the GDP in 2021 will be 114.367 trillion yuan, an increase of 8.1% over the previous year at constant prices. In terms of quarters, the first to fourth quarters increased by 18.3%, 7.9%, 4.9% and 4.0% year-on-year respectively. In December, major economic indicators diverged.
Production has accelerated, demand is weak
Fixed asset investment growth turned positive. In 2021, the national fixed asset investment (excluding rural households) will be 54,454.7 billion yuan, an increase of 4.9% over the previous year, and a decrease of 0.3 percentage points from January to November. According to accumulated data, the monthly growth rate in December changed from negative to positive. In terms of different fields, from January to December, infrastructure investment increased by 0.4% year-on-year, down 0.1 percentage points from January to November; manufacturing investment increased by 13.5% year-on-year, down 0.2 percentage points; real estate development investment increased by 4.4%, down 1.6 percentage points percentage point.
Consumption remains weak. In 2021, the total retail sales of consumer goods will increase by 12.5%, with a two-year average growth of 3.9%, of which December will increase by 1.7% year-on-year, 2.2 percentage points lower than that in November; among the retail sales of goods in December, the retail sales of automobiles and home appliances decreased by 7.4% year-on-year respectively. % and 6.0%.
Export growth has slowed down. From January to December, the national total export value (in US dollars) increased by 29.9% year-on-year, of which December increased by 20.9% year-on-year, down 1.1 percentage points from November.
Industrial production continued to accelerate. In 2021, the added value of industries above designated size will increase by 9.6% over the previous year, with an average growth of 6.1% in the two years. Among them, the year-on-year increase of 4.3% in December was 0.5 percentage points faster than that in November. The added value of the manufacturing industry in December increased by 3.8% year-on-year, 0.9 percentage points higher than that in November. Among the main steel products, the growth rate of automobile production turned from negative to positive, the output of metal cutting machine tools and power generation equipment maintained a year-on-year increase, and the output of industrial robots increased rapidly .
Economy still under pressure from demand contraction
In the fourth quarter of 2021, final consumption expenditure, gross capital formation, and net exports of goods and services drove economic growth by 3.4, -0.5, and 1.0 percentage points, respectively, and contributed 85.3%, -11.6%, and 26.4% to economic growth. The contribution rate of gross formation to economic growth is negative. However, fixed asset investment in December turned from a decline to an increase, mainly driven by manufacturing and infrastructure investment. According to the accumulated data, the decline in real estate investment in the month expanded significantly, indicating that the decline in real estate investment has accelerated.
In addition, exports grew rapidly in December, but the growth rate declined, and the marginal external demand weakened; the growth rate of total retail sales of consumer goods dropped rapidly and was the lowest in the year, reflecting that consumer demand is still weak.
The overall macroeconomic production has improved, but external demand is facing a marginal decline, domestic demand has not yet improved significantly, the real estate market has continued to decline, the decline in the area of commercial housing sales has expanded again, infrastructure investment is still insufficient, and consumer demand recovery is weaker than expected , the economy is still facing the pressure of demand contraction.
Steady growth policies continue to exert force
The GDP growth rate in the fourth quarter of 2021 was lower than the potential growth rate. Judging from the situation in December, the economy is still facing the pressure of shrinking demand and weakening expectations, and the pressure to stabilize growth is greater. The policy will put stable growth in a more prominent position.
On January 10, the executive meeting of the State Council pointed out that the 102 major engineering projects identified in the “14th Five-Year Plan” will be accelerated, the sluggish investment will be reversed, and the 1.2 trillion yuan of local government special bond funds issued in the fourth quarter of last year will be released as soon as possible. For specific projects, we will promptly issue special bonds issued this year, leverage more social investment, and strive to create more physical workloads in the first quarter. On January 14, the National Development and Reform Commission issued the “Notice on Doing a Good Job in Promoting Consumption in the Near Future”, proposing to tap consumption hotspots and growth points, further unleash the potential of residents’ consumption, and promote a stable start to the economy in the first quarter.
In terms of currency, on January 17, the People’s Bank of China launched a 700 billion yuan medium-term lending facility (MLF) operation and a 100 billion yuan open market reverse repurchase operation. Prices fell in December, the goal of monetary policy turned to steady growth, and there is still room for the marginal loosening of monetary policy in the later period.
The economy is expected to stabilize
In December 2021, the manufacturing PMI index rebounded in a super-seasonal manner. As a leading indicator of the economy, the growth rate of the stock of social financing has stabilized and rebounded in recent months, and superimposed policies have continued to be introduced. The economy is expected to stabilize in the first quarter of this year.
Investment is expected to be boosted in the first quarter under the promotion of policies. Since the second half of 2021, the pace of issuance of local government special bonds has accelerated, and the progress of investment within the central budget has been accelerated. is more certain. In addition, the fall in upstream prices and the easing of cost pressures in the mid-stream and downstream industries will help to promote the equipment renewal demand of manufacturing enterprises, which in turn will drive the growth of manufacturing investment.
The growth rate of consumption is at a low level, and measures to promote consumption will be implemented successively, including new energy vehicles, green smart home appliances to the countryside, and promotion of the upgrading of rural durable consumer goods.
Risks to the economy lie in exports and real estate. This year, the global epidemic is expected to ease, overseas supply chains will resume, and economic growth and demand expansion will slow down, which will restrict my country’s export growth; the real estate market is expected to be weak, residents are still cautious in purchasing houses, the decline in commercial housing sales and new construction area has expanded, and real estate investment has declined Pressure remains.
Steel needs to have improvement expectations but not too high
In the first quarter, infrastructure construction is expected to grow steadily, and the probability of steel demand expansion is high; the downward trend of real estate investment has not yet reversed, and new construction and construction areas continue to grow negatively. Sexual improvement is expected to be weak.
With the easing of cost pressures, the growth rate of manufacturing production has picked up. Among the major steel-using industries, the automobile industry has turned positive year-on-year, and industries such as general equipment, special equipment, electrical machinery and equipment have maintained a certain growth. From the perspective of leading indicators, the new orders index for manufacturing in December was still in the contraction range, but it rebounded for two consecutive months, and the demand for manufacturing steel is expected to remain resilient.
On the whole, the pressure of the contraction of steel demand has eased, and the expectation of improvement in the later period has increased. The uncertainty may lie more in real estate, and it is necessary to pay attention to the impact of the unexpected drop in real estate investment on steel demand. (Original article by Wang Jing of Langer Steel Research Center, please indicate the source when reprinting)
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