The strong growth of steel production in 2019 has contributed to the healthy growth of China steel m

First, it better meets the market demand. Since last year, in order to solve the downward pressure on the economy, the decision-making departments have been focusing on expanding short board investment and promoting consumption, strengthening the counter cyclical adjustment of macro-economy, resulting in a strong demand for steel throughout the country. It is expected that the demand for crude steel (including direct export) will be about 1 billion tons in the whole year. This year's crude steel output of about 1 billion tons basically meets the national steel demand. It is not hard to imagine that if China's steel industry keeps the same increase or even decrease of crude steel output as the demand, there will be a big problem in the supply-demand relationship of China's steel market in 2019, and the more serious supply gap will lead to a sharp rise in steel prices. As a result, it is bound to cause a great operating dilemma for the consumption of downstream industries, and drag down the stable growth of macro-economy.

Second, it effectively regulated the price rise. Economic law tells us that the relationship between supply and demand is closely related to the rise and fall of prices. Supply gap, of course, should promote price rise. The larger the gap between supply and demand, the stronger the price rise. Moreover, for this kind of price rise, administrative intervention generally has little effect. It is precisely because of the positive increase in production of steel enterprises this year, there has been a double-digit or close to double-digit increase in steel and steel production, which has restrained the overall rise in steel prices, and achieved the relative stability of PPI price index and the overall price level, thus providing operating space for macro counter cyclical adjustment. It must be pointed out that due to multiple factors, the high level of steel prices in China in 2018 is actually not conducive to the long-term healthy development of the macro-economy. This year, the steel price level dropped year-on-year, which is a "virtual fire" cooling down, "bubble" spillover, and returning to its reasonable level.

Not only that, the fall of steel sales price also reduces the cost of raw materials in the manufacturing industry, improves the price competitiveness of downstream industries, especially enhances the cost of export competition in the manufacturing industry, which has more advantages than disadvantages for the overall macroeconomic situation and indirect steel export.