Solve the deep-seated problems of iron and steel industry

Last year on December 22, minister of the ministry MiaoWei in the work of industry and information technology said on a conference, by the end of November 2014, has been backward steel production capacity of 27.9 million tons, a year early finished 12th five-year out backward production capacity, the target.

Until recently announced China steel association statistics, since 2014, China’s steel prices at record low, but in the main raw materials such as iron ore, coking coal prices fell by a bigger situation, China’s steel industry profitability and operating conditions are improved, steel industry profits in 2014 is expected to exceed 28 billion yuan. This will be the Chinese steel industry for nearly three years the best condition.

It seems that China’s steel industry ushered in the “good times”, but the “good times” is a steadfast.

Take a look at our increasing capacity and serious excess capacity, highly scientific product structure, excessive foreign dependence on raw materials, the complicated international trade situation, increasingly tightened bank credit, these factors make the iron and steel industry in our country this rare “good times”.

In fact, thinking it over carefully, iron and steel industry in China in 2014 “good times” do have a chance. Did not continue to sell cabbage price, largely because of the international iron ore prices slashed, this has brought the Chinese steel industry in the hot water.

In China as the world’s largest steel producer and exporter, the dependence on iron ore is very big, the share of imports of iron ore has been close to 55%. So the price of imported iron ore directly determines the iron and steel industry profit good and bad even surplus and deficit. Over the past few years, because our country iron and steel industry in the international iron ore price system in a weak position, not about the international iron ore prices, ate a lot of losses, in the years of high iron ore prices, the entire steel industry profitable, many companies and even loss is serious, the profit of a ton of steel production couldn’t even buy a catty of cabbage.

But since January 2014, the international iron ore prices fell sharply, China’s imports of iron ore prices continue to also emerge in the sharp decline in the trend. In early 2014, nearly one thousand yuan per ton, down to December 12, 530 yuan per ton, prices of basic. It also become one of the main factors of domestic steel industry profit rebound.

But in the face of we cannot control system of raw material prices, the industry can expect iron ore price is hovering low forever? This is too optimistic. In the third quarter of 2014 years ago, in the context of domestic iron ore production capacity increase, China’s iron ore external dependence still reached 54.1%, and the situation of China’s iron ore imports will exist for a long time, the raw materials of others will be inevitable.

In the face of other all sorts of complicated problems, the whole industry to continue to “good times” obviously there are a lot of difficulties to be solved.

The top is facing the dissolve the pressure of excess capacity still difficult.

Through the governance of excess production capacity in recent years, China’s steel industry overcapacity problem abated, growth slowed. But the problem is still not eradicated. Have agency predicted that China’s steel production capacity will exceed 1.1 billion tons in 2014, but the capacity is less than 76%, failed to meet international standards of excess production capacity in (78%). More serious is that our country there are still some backward steel production capacity has not been eliminated. In 2014, according to government plans to eliminate 27 million tons of steel production capacity, but by the end of September only completed 63%, eliminate backward production capacity, pressure is still large.

Eliminate backward production capacity is a complex process, absolutely not just Numbers drop can be everything is all right. Involved in personnel placement and assets disposal complicated problem. In October 2013, promulgated by the state council “about defuse the guidance”, excess capacity contradictions, put forward five years further compression steel production capacity of 80 million tons. But only in personnel placement, for example, if in accordance with the industry average labor productivity level, every 10 million direct employment from 20000 to 20000 tons of steel production capacity calculation, then the compressed 80 million tons of production capacity will directly affect the job placement of the staff of 200000, and further reduce capacity will also affect the upstream and downstream, ports, transportation and other related industries, and people will be more to be resettled. More difficult is that our country blast furnace new capacity 30 million tons, 2014 late release pressure capacity remains.

But from the point of the path of the iron and steel industry development in the developed countries, reduce capacity is the basis for optimizing the adjustment of industry only, cannot bypass. This requires relevant departments with greater determination and courage to solve this dilemma.

“Good year” in 2014 was warming and an increase in exports from the international market.

According to three quarters of 2014 years ago, China’s steel exports increased dramatically, net exports of steel 54.33 million tons, an increase of nearly 50%. This obviously for domestic excess steel production capacity found an important channels to resolve.

But the trend of export growth from the moment it is difficult to keep it up.

In 2015, analysts say, China’s steel exports, growth is expected, the downside risk. In addition to the unstable factors to increase the international political situation, the whole industry will face a global excess capacity. In the face of global excess steel production capacity, market competition will be more intense, trade protectionism will increasingly serious.

Since 2014, China’s steel industry is facing from the European Union, the United States, Mexico, Brazil, Indonesia and other 14 countries and regions of trade friction, involving a variety of steel products. Especially since the third quarter of last year, China’s steel exports have frequent trade friction, exports will face greater resistance in the future.

Iron and steel industry in our country there is a Achilles’ heel, it is affecting the entire industry’s profits: an unreasonable product structure. Some high-end steel products self ability is insufficient, especially the core component of a number of key projects and key areas of key steel materials remain disciplined by others. Industry layout also need to be optimized at the same time, many enterprises in urban districts by environmental constraints, relocation task facing. Industry transformation needs a long process.

Raw material security, environmental protection pressure and the financing difficult problem become more prominent, restrain the sustainable development of the industry.

But the ministry has released “transformation and upgrading of the iron and steel industry development plan (2015 ~ 2025)” in 2015, the main work, solve the deep-seated problems of iron and steel industry is expected to get system.