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Although this wave of rectification is mainly aimed at the steel market, it also has a great impact on the stainless steel market, among which an intermediate frequency furnace has a great impact. It has become a historical necessity that the intermediate frequency furnace has been eliminated. Although there are recent rumors that the intermediate frequency furnace is caught and leaked at night, the minor incidents can't affect the overall situation.

Medium-frequency furnaces occupy a large share of the stainless steel scrap market. According to the current pace, the operation mode of small workshops will be eliminated, and it is imperative for large and medium-sized steel mills to go online for environmental protection. Therefore, the processing cost of corresponding scrap and finished products will rise. If steel mills want to ensure their own profits, the price difference between scrap and finished products will inevitably widen further.

The pain of reform can't be avoided. While environmental protection is being strengthened, we also see the government's determination to remove production capacity. At this meeting, the vice minister of the Ministry of Industry and Information Technology proposed that removing production capacity is not equal to removing backward production capacity. If necessary, advanced production capacity should also be removed, such as Baosteel Stainless Steel 2500 BF, which belongs to advanced production capacity and has also been removed. According to the idea of environmental protection, the supply-side reform is expected to be implemented in the later stage, which has a positive impact on steel prices. For stainless steel, the supply-side reform should be to eliminate small and micro backward production capacity and integrate large factories, etc. In 2016, the merger of Baowu Steel became a new trend in the industry, and the acquisition of Lianzhong by Angang was also one of the development directions. It is expected that later integration adjustments will emerge one after another.

2017 will be a big adjustment year for the industry, with risks coexisting with opportunities. After the transformation, it will be more suitable for the development of the industry.

In addition to the factors of improving supply and demand brought by production capacity, internal factors such as strengthening management and vigorously reducing costs of stainless steel seamless pipe enterprises in 2016 also contributed to the performance improvement. De-capacity has not only helped the stainless steel seamless pipe industry eliminate backward production capacity, but also eased the pressure of market surplus. The most important thing is to help the whole stainless steel seamless pipe industry build confidence, and everyone has a more optimistic expectation for the market. This optimistic expectation is also very important for the next step of capacity reduction and transformation and upgrading.

Many of the tasks completed last year were idle and backward production capacity that had been discontinued before, so the progress speed was relatively fast. This year, it is not an easy task for the stainless steel seamless pipe industry to eliminate the production capacity on the basis of last year.

There will definitely be challenges, but the road of de-production capacity must be taken, and efforts must be continued. Local governments must strengthen supervision, strictly clear and dismantle it. It is not because the current market is good that the strip steel is revived, and it is absolutely impossible to go back to production capacity. As for the specific way of implementing capacity reduction, besides effectively disposing of "zombie enterprises" and severely rectifying "strip steel", it will be an effective way to further carry out merger and reorganization in stainless steel seamless pipe industry. In the process of de-capacity, not only state-owned stainless steel enterprises need to take the lead in integration, but also private stainless steel enterprises need to do some integration. The merger and reorganization of private stainless steel enterprises is not only beneficial to the regional market, but also the right of enterprises to speak when purchasing raw materials such as ore will be correspondingly enhanced. For the market prospect of 2017, on the basis of the de-capacity completed in 2016, the whole country should vigorously promote the continuous reduction of stainless steel pipe production capacity. If it is put in place, the supply and demand of the market will be further balanced, the price trend of stainless steel seamless pipe may be better than that of 2016, and the profits of domestic stainless steel enterprises are also expected to reach a new high on the basis of 2016. For stainless steel enterprises this year, as long as they continue to increase efforts to improve efficiency and reduce costs, they should practice their internal strength.

Considering that last year's stainless steel pipe capacity removal was mostly ineffective, and the output was still at a new high, this year's supply-side capacity removal is expected to go further in the substantive direction, especially the strip steel production capacity will be completely cleared in the first half of the year, which will have a substantial impact on the stainless steel pipe market supply. At present, the social inventory of stainless steel pipes has entered a downward channel. This year, the demand for stainless steel pipes started earlier than in previous years. Within a few days after the Spring Festival, a number of real estate and infrastructure projects started to start. In the third week, the social inventory and the total inventory of stainless steel factories began to decline, and in the fourth week, the inventory was fully transferred to the decline channel.

With the stainless steel pipe market entering the peak consumption season of "three golds, three silvers and four silvers", the demand is expected to be further improved. The Supply Development and Reform Commission made it clear that in the first half of the year, the production capacity of industrial frequency furnaces and intermediate frequency furnaces for building stainless steel materials will be completely banned. During the two sessions, the steel mills in North China will limit production by 50%, and the irregular environmental supervision by the Ministry of Environmental Protection will have an impact on the overall supply, especially the supply of building stainless steel materials will still be significantly restrained.