Ministry of Industry and Information Technology: Steel industry needs to control production

Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, said on the 25th that due to the structural problems and the reversal of market demand, steel enterprises must get out of the predicament and need to control production and eliminate backwardness, and further promote mergers and acquisitions among enterprises.

Steel production needs to be controlled

At present, the production capacity of China's steel industry has reached 900 million tons. How to control the output of the steel industry and resolve the contradiction between supply and demand has become a difficult problem in the industry.

“The steel industry has developed very fast in recent years, and the problem of overcapacity has become more and more prominent.” Zhu Hongren pointed out that the crude steel output in the first half of the year was 357 million tons, up 1.8% year-on-year, and the growth rate dropped by 7.8 percentage points compared with the same period of last year. The current average daily output is equivalent to playing the full year of 716 million tons.

According to the China Iron and Steel Association, the prices of eight varieties of steel in the domestic market have been falling. At present, the price of high-line, rebar and plate is about 4,000 yuan, and at the end of last year it was 4300-4500 yuan. The price of cold rolled sheet has also dropped by about 500 yuan.

The continuous decline in steel prices has created a “fatal blow” to the profitability of steel companies. In response to the loss situation in the steel industry, Zhu Hongren said that the current structural problems of steel enterprises and the fall in market demand are superimposed. To overcome such difficulties, we should control production and eliminate backwardness, especially to promote enterprises to focus on the urgent needs of the market. High quality steel grades.

According to the latest statistics released by China Steel Association, the average daily output of crude steel in the first half of July is still 1.595 million tons, still at a high output. This means that steel prices are not positive when steel prices fall sharply and the industry is at a loss.

“The current steel market is facing multiple pressures of low demand for downstream steel, high domestic steel output, and unsatisfactory export situation. Price-loss-reduction, this path will be the forced choice of steel mills.” Lange Steel Information Zhang Lin, a researcher at the research center, said, “Steel mills are not willing to rush to stop the blast furnace. It is also a consideration of taxation, employment, loans, local government support and other factors.”

It is understood that the reduction of steel mills in the early stage was mainly concentrated in the production line of rolled products, but it was reported that the situation of blast furnace shutdowns has recently occurred. Insiders pointed out that whether the supply pressure can be alleviated in the future depends on the steel mill's production reduction.

When reorganization comes

As the steel industry is in a downturn, the cost of mergers and acquisitions also decreases. The industry believes that for large steel companies, the time to accelerate mergers and acquisitions has arrived.

Zhu Hongren pointed out that the Ministry of Industry and Information Technology will continue to actively support the merger and reorganization of iron and steel enterprises, increase the intensity of technological transformation, support the steel industry to implement industry self-discipline, prevent excessive expansion of production, and provide further support for the elimination of backward work.

According to the plan of the Ministry of Industry and Information Technology, the number of steel enterprises will be greatly reduced during the “Twelfth Five-Year Plan” period. The proportion of steel production in the top ten steel enterprises in the country is increased from 48.6% to 60%. Focus on supporting large-scale steel enterprises to carry out cross-regional and cross-ownership mergers and acquisitions, and form 6-7 enterprise groups with core competitiveness and strong international influence. The introduction of relevant policies will become a "catalyst" for mergers and acquisitions in the industry.

According to industry insiders, unlike the companies that have been close to the collapse of strong companies in the past, the joint restructuring of steel companies in recent years is more than a spontaneous restructuring or spontaneous restructuring and internal integration to meet market challenges. After the merger and reorganization, the realization of product structure adjustment and industrial chain extension is an important direction for the future development of steel enterprises.