Once a decade to get out of the steel circle
“Production capacity is more and more, the more the higher the production.” This is the past decade the most typical portrayal of China’s steel industry.
From 350 million tons in 2005 to 800 million tons in 2015, ten years of rapid growth of China’s steel production. In the policy of the state on the steel industry, from the “elimination of backward production capacity” to “to production capacity” to “supply side reform”, the term policy changes more and more years, but the significance is very similar, that is, Reduced production capacity.
Perhaps many people can not imagine, as early as 2005, the National Development and Reform Commission had once proposed to the steel industry, “eliminate backward production capacity,” the request was “Eleventh Five-Year” period, China’s steel production capacity of 400 million tons, 100 million tons behind the iron-smelting production capacity and 55 million tons behind the steel-making capacity. “However, less than a year, steel production quickly exceeded 400 million tons. Since then, to go with the development of iron and steel industry production capacity, is mentioned every year, every year on the suppression of the steel industry production capacity of the “red tape” introduced, but the steel production capacity is constantly expanding the road gone.
Until 2015.
2015, China’s steel industry is a turning point. The country’s crude steel output in 2015 was 804 million tons, down 2.3 percent year on year, the first time since 1981, the annual decline. The actual consumption of steel 664 million tons, down 5.4%, the first decline in 1996. The reason why such a turning point, and the industry itself is inseparable from successive years of losses. 2012, 2015, the steel industry long-term loss, the profit margin of the main steel industry when the minimum even less than one percent.
Iron and steel industry to the true sense of the capacity to the first year
In 2016, with the general direction of supply-side reform, the focus of the policy is tilted from the demand side to the supply side. To promote the supply side of structural reform, the focus is to capacity. Unexpectedly, the steel industry is still “go to capacity” in the wave of carry handle. According to the plan, China will be in five years to reduce crude steel production capacity of 100 million to 150 million tons. Which is the task of steel production capacity this year is 45 million tons.
From the beginning to date, China’s steel exports have suffered many sanctions, China’s steel production capacity to the issue and even rise to the impact of international trade relations of the important position, so that the Ministry of Commerce, and even national leaders many times for China’s steel industry to production capacity Made an explanation, but also for the first time the establishment of an international cooperation team on the steel production capacity of inspectors. Domestically, from the provinces and autonomous regions have released specific targets to the capacity to the central one week will focus on steel production capacity to the issue, to the National Development and Reform Commission to the monthly production schedule to publicity. Tension atmosphere seems to let us glimpse a trace of the feeling is not the same as in previous years, that is the real sense of the steel industry to production capacity, began.
According to the Ministry of Industry and the latest data show that from January to July this year, 28 steel-producing areas and central enterprises to complete a total reduction of steel production capacity of 21.26 million tons, accounting for 47% of the annual task volume. From January to June of 13 million tons to 1 – July of 21.26 million tons, to significantly speed up the production capacity.
From the Development and Reform Commission announced the progress of the situation, as of July, Zhejiang and other four provinces have completed the annual task; Hebei, Liaoning and other eight provinces in the progress of 10% -35%; more than 10 provinces to resolve excess steel production capacity The work has not yet been substantially initiated. A few days after the announcement, Hunan Province announced the completion of the steel production capacity in 2016 ahead of schedule. Subsequently, Baosteel, the dominant steel producer in China, announced ahead of schedule the completion of this year’s production capacity of 3.95 million tons.
In the just-concluded coal and steel industry to resolve the excess capacity and the work of the development of inter-ministerial joint meeting, called “all over the country shall not in any way any way to record the new capacity of steel projects, all filing iron and steel projects must implement capacity replacement targets, Within three years to stop the approval of new coal projects, new capacity of technological transformation projects and production capacity of nuclear projects, and resolutely prevent the production side edge reduction.
Can be seen in the steel industry to the process of production capacity, “control increment” and “clean up the stock” is at the same time.
To the process of difficult
However, can not be ignored is that for ten years did not “go to” the success of the steel industry, the reduction of crude steel production capacity of 1-1.5 million tons of difficulty is undoubtedly enormous.
The first is the temptation of profit. The iron and steel industry can accumulate into today’s huge pattern, the golden years of verification of the once high profits. However, after four consecutive years of losses, the steel industry in the first half of 2016 miraculous profitability, and steel prices have returned to the soaring, a direct result of the output of another major outbreak. Development and Reform Commission head Xu Shaoshi said this, the first half of steel consumption fell 2.7 percent, coal consumption fell 5.1 percent, does not have the basis for continued price recovery. However, the temptation of profit is undeniable as this year’s production capacity to stumble.
In the temptation of profits, the steel industry for many years also derived from another problem: the net is not clean to the steel, is for many years to “production capacity” of the hidden dangers. Just like waste oil, black workshops, to the quality of steel products, but unqualified high profits, the interests of complex chain, very strong covert, a huge number. According to previously reported data, China or the existence of more 80 million tons of steel production capacity. July CCTV had exposed the illegal production of steel to the issue of Jiangsu Province, Jiangsu Province in early August this year issued a strict and resolutely banned “to build steel construction timber” production and sales notice. But many of the steel companies are very subtle, and some even the name of the word is not steel, leading to law enforcement sector management difficulties, but from the past method, the inspection power consumption is to find out the steel companies to a very effective method . Such as the provincial government of Jiangsu Province, the provincial Development and Reform Commission, the Public Security Department, the Environmental Protection Department, Trade and Industry Bureau, Quality Supervision Bureau, Safety Supervision Bureau, power companies and other departments and units jointly participate in the special inspection team, the production and marketing of municipal production Sales for the net-type investigation, it is expected to crack down on the fight against an effective bar.
Followed by the steel industry before the exit mechanism is not perfect. Iron and steel industry is capital-intensive, the threshold is not high, but the exit is difficult. Expensive equipment, personnel placement, capital and debt are leading to iron and steel enterprises can not easily and can not “exit” reasons. This situation is gradually improving, this year the country 8 ministries and commissions continuous introduction of the policy for the supply side reform “escort”, the enterprise funds, personnel flow and a series of issues to make a guarantee. In addition, the state has to go to the production capacity of enterprises to provide more support and broaden the way out. On the issue of debt, the debt-to-equity swap program is being studied and perfected, and there are rumors that the debt-default-ridden Sinosteel Group’s debt-to-equity swap program has been submitted to the State Council; Reform, the Henan Province to determine the 8 steel and other state-owned enterprises as a mixed change pilot and so on.
From the experience of the past decade, China’s steel industry to rely solely on the leverage of the market economy to adjust has been difficult to play a role. This is now a massive momentum to the production, the concentration of a strong policy, combined with all law enforcement agencies, from the central to the local government responsibility details, layers responsible for the place, the history of the most stringent production capacity to the industry must be subversive pain. Indeed, in 2016 can be said that the steel industry in the true sense of the capacity to the first year. The first year, on behalf of a new start, it is worth looking forward to all.