High output of crude steel predicts that the economy will not deepen in the second half of the year

In July, the HSBC China Purchasing Managers Index (PMI) slipped to its lowest level in 28 months, at 48.9, the first time it fell below the declining line. This data frightened investors, and the market feared that there would be a substantial decline in the economy in the second half of the year despite the fact that macro-control measures were not relaxed.

However, some data and development trends from the real economy such as steel and cement show that the decline in PMI does not mean that the economy will soon undergo a deep adjustment. On the contrary, in the third quarter, with inflation peaking, the economy is likely to bottom out and start a new growth cycle.

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Iron and steel and cement are indispensable raw materials for national economic investment. It is often reliable to observe the hot and cold of the macro economy through its current status.

The output data of steel and cement in the first half of the year is very interesting. They are all industries with overcapacity identified by the authoritative department. However, in the first half of the year, China's crude steel production reached 350.5 million tons, an increase of 9.6% year-on-year. In June, domestic crude steel production was 599.3200 tons, equivalent to an annual output of 729 million tons of crude steel. At the same time, the national cement output in the first half of the year was 950.83 million tons, an increase of 19.6% year-on-year; the profit of the cement industry in the first five months was 35.26 billion yuan, an increase of 1.7 times, an increase of 141 percentage points.

The growth of steel and cement production accelerated in June, reflecting the macro data that the industrial growth rate in June rebounded by nearly two percentage points, which is beyond the range that can be explained by the base effect. The growth rate of the industrial chain was also at the beginning of the year. The highest value.

Looking forward to the second half of the year, the China Iron and Steel Association believes that in the second half of the year, China's fixed asset investment will still be greater, and the construction of farmland water conservancy facilities and affordable housing will be the focus. Fixed-asset investment will continue to grow rapidly, so the domestic market Demand is still strong. If this is the case, the steep drop in industrial growth in April and the subsequent economic weakness will be a temporary adjustment, and the economy will bottom out in the third quarter. In fact, as a participant in the market economy, companies always arrange production plans based on market demand. In the past few years, although it has always been considered that excess capacity has been regulated, steel production has been consistently hitting new highs along with high economic growth in China.

Investment data can also illustrate some issues. In the first half of the year, the total planned investment for new projects started was 112,166 million yuan, a year-on-year increase of 14.9%; the total investment for construction projects was 4,708.3 billion yuan, an increase of 19.6% year-on-year. The total investment for the new projects started has been bottomed out for 5 consecutive months since the beginning of this year, indicating that the investment engine will still play an important role in the second half of the year.

However, despite the fact that there is no worry about economic growth, there are still some issues that deserve consideration. The contribution of investment in the second quarter was almost twice as high as consumption, indicating that the structural transformation of the economy was extremely difficult. In fact, as early as the beginning of the year, some steel industry officials stated that this year's crude steel production will certainly not come. "We must adjust the structure, eliminate backward production capacity, but also to build 10 million sets of affordable housing, overhaul water conservancy, how to do?" The official said so.