Winter Olympics sparked good tide of steel

On July 31st, Beijing joined hands with Zhangjiakou to obtain the right to host the 2022 Winter Olympics. This has inspired the steel companies. The industry is expected to drive the recovery of the steel industry in China in the next seven years.

According to the Winter Olympics Committee's plan, the Beijing Olympic Winter Games 2022 will form three relatively clustered venues in Beijing, Yanqing and Zhangjiakou. The snow project will be arranged in Zhangjiakou. Now Beijing is planning to build a high-speed railway to Zhangjiakou. In addition to railways, the construction of venues, surrounding real estate projects, highway construction, and bridge construction will all stimulate the demand for construction steel.

According to agency estimates, during the 2016-2022 period, the Winter Olympics will indirectly drive 55 million tons of construction steel demand each year, including 44 million tons for housing construction and 11 million tons for infrastructure construction.

However, in fact, the annual demand for 55 million tons of construction steel products is actually limited to the steel industry. It is understood that the market demand for construction steel still mainly depends on real estate. From the data point of view, the real estate industry accounts for 55% of the market demand, while the infrastructure industry only accounts for 15%. The market demand for the steel industry is actually limited.

At the same time, not all steel companies have a share in this wave of positive waves. As a national project, the Winter Olympics will use more products from large-scale steel companies, and the probability that second- and third-tier plants will be “in phase” will be much smaller. The venues for the Olympic Winter Games and related infrastructure construction needs are more oriented to high-end steel products. In this regard, high-quality enterprises will be even more attractive, and SMEs will face the challenge of obsolescence and upgrading.

In addition, the upgrading of the Olympic Winter Games environmental monitoring will also put pressure on small and medium steel companies. There are tens of thousands of steel companies in the Beijing-Tianjin-Hebei region, but most of them are difficult to form. The environmental protection equipment of steel enterprises is criticized by the outside world.

Despite this, the benefits of the Winter Olympics to the steel industry are mainly to boost market confidence, and the psychological stimulus is greater than the actual support.