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        Adapting to the New Normal is the Way for the Development of Valve and Seamless Steel Enterprises
        Column:Industry Dynamics Time:2016-07-14

        With the increasing downward pressure of the economy and the sharp reduction of international crude oil prices, the output and export of valves in China both declined in the first half of this year. International oil prices have fallen sharply, the demand for green energy such as hydropower and wind power has increased, and the market of valve enterprises, mainly energy products, has shrunk. Enterprises have encountered unprecedented difficulties. The transformation and upgrading of the industry will be a long process.

        The final value of HSBC's China Manufacturing Purchasing Managers Index (PMI) in June 2015 was 49.4, which was lower than the market expectation of 49.6, slightly higher than the final value of 49.2 in May, but it was lower than the 50-year line for four consecutive months. In June, the output index rebounded slightly, with new orders and export orders returning to above 50, but manufacturing companies continued to shed staff, resulting in the employment index falling to 46.6, the lowest since February 2009. In addition, in May, the PPI of all industrial products fell by 4.6% year-on-year, which has been declining for 39 consecutive months, and the PPI of metallurgical industry has been declining for 43 consecutive months.

        In the first quarter, 101 iron and steel enterprises recorded by China Iron and Steel Industry Association lost 987 million yuan, a loss of 70.39% compared with the same period last year. Among them, the profit of the main business is - 11.153 billion yuan, a loss of 45.04% year on year, which indicates that the profitability of the main business of Chinese iron and steel enterprises has further declined. Although the cost reduction caused by the decrease of iron ore price ranges from 500 yuan/ton to 550 yuan/ton, the valve industry of iron ore high-end products is facing more fierce homogenization competition because of its less market capacity. In this climate, the largest number of ball valves, gate valves and globe valves in the valve industry is the same, and globe valves have encountered unprecedented difficulties.

        Since 2015, China's steel pipe production growth rate has been higher than China's total steel output growth rate, but the seamless steel pipe and welded pipe in the steel pipe have obvious polarization, seamless steel pipe production has declined year-on-year, this year's seamless steel pipe production may be lower than last year's level, it is estimated that the annual seamless steel pipe production is 29 million tons. About.

        Seamless steel pipe enterprises are mainly steel pipe enterprises used in oil, natural gas, electric power, coal, gas cylinders and other energy industries. These are also the largest units of valve consumption. The dramatic changes in the oil and gas market have a negative impact on seamless steel pipe enterprises. Seamless steel pipe is mostly oil well pipe and oil and gas pipeline. These are superior products with high technology content and high added value, but due to the dramatic changes in the market situation, the production enterprises of ball valves and gate valves, which are used most for oil and gas, are facing difficulties.

        Whether valve enterprises or seamless steel pipe enterprises are facing heavy pressure from many aspects, they should actively adapt to the new normal, pay attention to structural adjustment and enterprise transformation and upgrading, and take the road of innovation-driven and quality-benefit development. However, structural adjustment and transformation and upgrading are not a matter of overnight, but a long and arduous process. Governments, industries and enterprises must make long-term psychological preparations and meticulous response measures.


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