Lange reports: 2020 infrastructure shortcomings or highlights of the steel industry

After entering 2020, various policies will be implemented. For example, recently, the People's Bank of China announced that it had lowered its quota on January 6, and local governments started issuing special bonds. The 2019 Central Economic Work Conference has repeatedly emphasized the release and implementation of policies such as supplementing shortcomings in infrastructure construction. Everyone has focused their attention on the real economy, and the shortcomings in infrastructure investment will become the highlight of the development of the steel industry in 2020.

    A few days ago, the People's Bank of China announced that it will reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on January 6 (excluding finance companies, financial leasing companies and auto finance companies). The overall RRR cut will release more than 800 billion yuan of medium and long-term liquidity, which will promote financial institutions to increase their service to the real economy. However, it is worth noting that the reduction in standards does not mean a shift in monetary policy. The ultimate purpose is to promote the decline in loan interest rates, thereby reducing the financing cost of the real economy.

    On January 2nd, the special bonds of Sichuan and Henan provinces were issued through public tender, which was nearly 20 days earlier than the same period last year, and became the earliest province to issue special bonds in 2020. In addition, Yunnan, Zhejiang, Shanxi, Shenzhen, Guangdong and other provinces and cities have also announced plans to issue special bonds in January 2020, with a scale of 438.6 billion yuan.

    It is understood that Sichuan Province has successfully issued 35.671 billion yuan of new special bonds with maturities of 10, 15, 20, and 30 years. It is mainly used for toll roads, urban and rural infrastructure, cultural tourism, ecological protection, schools, health, Construction of industrial parks, water services, rural revitalization and other projects. Henan Province successfully issued 51.9 billion yuan of new special bonds with maturities of 5 years, 7 years, 10 years, 15 years, and 30 years. It is mainly used for transportation infrastructure, agriculture, forestry and water conservancy, social undertakings, ecological environment protection, municipal and industrial parks. Facilities and other projects.

    According to industry insiders, from the current point of view, the curtain on the issuance of trillions of special bonds has been opened in advance, and the proportion of infrastructure has increased significantly. With the acceleration of the issuance rhythm, local government bonds for infrastructure funds in the first two months of 2020 or It will be double the same period in 2019.

    In addition, at the 2019 Political Bureau meeting, it was explicitly mentioned that "strengthening infrastructure construction". The Central Economic Work Conference also emphasized once again that the construction of major railway projects such as the Sichuan-Tibet Railway will be promoted again in 2020. According to statistics from the Lange Iron and Steel Research Center, from January to November 2019, 35 railway investment projects were approved, planning and construction of 6,459 kilometers of railways, and a total investment of 1.158 trillion yuan. The advancement of railway investment projects is accelerating. Carry the beam of "steady growth" again.

    Ge Xin, deputy director of Lange Iron and Steel Network Research Center, said that in 2020, China will comprehensively benchmark the tasks set in the "Thirteenth Five-Year Plan" to accelerate the completion of shortfalls in transportation infrastructure. The focus is on high-quality railway development and the promotion of supporting facilities. Construction of "last mile" projects such as engineering and railway lines. Especially at the end of 2019, special bonds continued to be issued. Policies such as the release of the new policy for special bonds, the early release of quotas in 2020, and the reduction in capital ratios will all significantly enhance the funding sources of railway projects. Railway projects will be constructed in 2020. With the support of policy funds, there will be another climax of construction.

    It can be seen that infrastructure investment in 2020 will become a catalyst for economic growth, which will bring a lot of steel demand, which is good for the steel market.