The most popular steel has obvious effect of reduc

2022-08-26
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The effect of "de capacity" of steel is obvious, but the "de leveraging" of steel enterprises has a long way to go

at the 20th Bozhi macro forum "capacity investment cycle" held recently, Li Xinchuang, President of metallurgical industry planning and Research Institute, was invited to give a keynote speech

Li Xinchuang first showed the "de capacity" situation of the steel industry through data: in 2016, the state officially announced the elimination of 65million tons of backward production capacity, and at the same time, it plans to eliminate another 50million tons in 2017. At present, the task of eliminating production capacity this year has been basically completed. At the same time, according to the statistics of the national development and Reform Commission and the Ministry of industry and information technology, about 120 million tons (about more than 600 enterprises) of "ground steel" production capacity have been eliminated in the past two years. Because the "ground steel" production capacity is not within the statistical range, the 120 million tons of ground steel production capacity will produce at least 50 or 60 million tons of steel production per year. According to the data of 2017, the growth rate of China's steel production is still relatively high. From January to August, the crude steel output was 566.4 billion tons, an increase of 5.6% year-on-year. As China's steel production accounts for half of the total global steel production, it also drives the growth of global steel production. In 2015 and 2016, China exported more than 100 million tons of steel. From January to August this year, the export volume of steel was 54.47 million tons, a year-on-year decrease of 28.5%. Among them, the main material products related to the production of "ground bar steel" decreased the most, while other products decreased slightly, indicating that the policy of cracking down on "ground bar steel" has been effective; More importantly, this year's steel import and export results meet the national policy requirements, that is, "encouraging the export of high value-added products". Although the export volume of steel products decreased by 28.5%, the sales revenue of steel exports increased compared with the same period last year

China imported 1 billion tons of iron ore in 2016. From January to August 2017, the import volume of iron ore was 7139.8 million tons, an increase of about 6.7% year on year. Therefore, it is expected that the import volume of iron ore this year will increase by about 6% on the basis of 1 billion tons last year. China imports more than 10 million tons of steel every year, so the import pressure is small. The reason for importing steel is not that it cannot be produced domestically, but that it is a policy issue: first, the policy of "tax exemption for processing with supplied materials and processing with imported materials" set at the early stage of reform and opening up, and second, the problem of industrial chain

as for the competitiveness of the steel industry, Li Xinchuang pointed out that the view that "exported steel is of low added value" is wrong. Compared with the high-end steel products exported, some export prices of China are higher than the import prices. At present, China's steel industry is the most internationally competitive among all the major traditional industries. One of the reasons for the delay of this year's human rights report is that the U.S. government does not want the criticism of Iran in the human rights report to affect the ongoing Iranian nuclear negotiations, so it is going to reduce production capacity. The main reason is that there is serious overcapacity, which is also to improve the efficiency of steel enterprises and avoid a series of risks. Take the statistics of China Iron and Steel Association on member enterprises as an example (the total output of these enterprises accounts for nearly 80% of the total output of steel in the country). From January to July this year, the member enterprises of China Iron and Steel Association realized a profit of 70.7 billion yuan, compared with 14.3 billion yuan in the same period last year. The overall financial situation of enterprises has improved. In the same period last year, 30% of enterprises suffered losses, while from January to July this year, only 11.7% of enterprises suffered losses. However, the sales profit margin of steel enterprises is not high. Even with a revenue of 70.7 billion yuan, the sales profit margin of iron and steel enterprises is only 3.4%. In contrast, the average sales profit margin of industrial enterprises is about 6%, and that of the financial industry is about 30%. The profit margin of the most competitive industry in the world is so low, while that of the uncompetitive industry is so high. This situation should be reversed

the effect of "deleveraging" of steel is very obvious, but the "deleveraging" of steel enterprises still has a long way to go. By the end of July, the total debt ratio of iron and steel enterprises was 69.9%. At the same time, according to the statistics of the iron and Steel Industry Association, the total assets of iron and steel member enterprises were 4.8 trillion yuan, which was equivalent to nearly 3.5 trillion yuan of debt at a debt ratio of 70%. The view that the profit of steel is too high does not take into account the cost factors such as depreciation, management of steel and coal de capacity, difficult landing expenses, interest, etc., does not take into account the increasing cost of steel enterprises to increase investment in safety and environmental protection, and does not take into account the serious problem of low income of steel workers, etc., and simply exaggerates the high profit of steel, which is a big mistake. Therefore, the steel "de capacity" policy should be firmly implemented and cannot be shaken. At the same time, the "deleveraging" of steel enterprises should also continue, otherwise the high debt ratio will make it difficult for enterprises to survive

Li Xinchuang also analyzed the policies related to the steel industry:

the first is the environmental protection policy. The "one size fits all" of environmental protection policies for iron and steel enterprises regardless of good or bad is wrong. Enterprises that meet environmental protection standards should not limit production or reduce production, but the "one size fits all" of enterprises that do not meet environmental protection standards is correct. The environmental protection production restriction policy will not have a significant impact on steel supply, because after the implementation of the environmental protection production restriction policy, the demand for steel in relevant industries will decline, especially the overcapacity of steel, which can fully meet domestic steel demand. At the same time, China can also maintain domestic steel supply by reducing steel exports

the second is export policy. Worldwide, 30% of steel products are exported directly, and 20% are exported indirectly. Another reason for the improvement in the efficiency of China's steel enterprises this year is that China's exports of mechanical and electrical products maintained a growth rate of 14% from January to August. The sales of mechanical and electrical products can drive the sales of steel products, so steel enterprises also laid a solid foundation for enterprises to participate in the formulation of national and industrial standards. The improvement in efficiency is not entirely caused by the growth of domestic infrastructure investment, but also includes the growth of mechanical and electrical products exports

there is no problem in the iron and steel industry that "the selection results of the first batch of" green benchmark enterprises "of vehicle materials by Guojin people are announced and withdrawn at the same time". In 2000, private steel production accounted for less than 10% of the total output, while today this proportion has exceeded 60%. At the same time, the "debt to equity swap" of steel enterprises should be implemented to reduce corporate debt, which requires financial institutions to truly serve the real economy. In addition, iron and steel investment needs a reasonable layout, such as the construction of coastal iron and steel enterprises, the realization of "one belt and many points networking" of iron and steel layout, and the reduction of enterprise operating costs. For the healthy development of the iron and steel industry, it is necessary to reshape the value chain and comprehensively improve competitiveness with the synergy of nine modernizations (greening, orderliness, quality, standardization, differentiation, service, diversification, intelligence and internationalization). Therefore, the iron and steel industry needs a lot of investment for green development and orderly integration, as well as enterprise service, differentiation and intelligence. The CPC Central Committee encourages qualified enterprises to "go global". In the past two years, there have been many successful cases of steel enterprises "going global", and their competitiveness has also been greatly strengthened at home and abroad. All these show that the steel industry still needs a lot of investment to upgrade

Li Xinchuang finally put forward the following conclusions:

first, China's steel industry is likely to lead the world for 100 years. Looking at the development history of modern steel in the past 200 years, Britain has led the world for 80 years, the United States has led the world for 70 years, and China may be more than 100 years. At present, China's steel industry has good products, good prices, good services, good scale and good brands. China is the largest and most active market in the world, accounting for about 45% of the global steel sales. China's iron and steel industry has the latest and most advanced technical equipment, the most complete and complete industrial system, the most abundant and abundant human resources, and the fastest and most timely service system. This is a rare competitive advantage that millions of workers in our iron and steel industry have worked hard for decades

second, China has a mature steel market and rare industrial comparative advantages. The construction cost of China's steel industry is only 60% of that of developed countries in Europe and the United States, which shows that China's steel industry is highly competitive. Since we want to lead the world for 100 years, we need to attach great importance to the steel industry from the perspective of national macro policies; Because the industrial positioning is accurate, mining, energy, finance and services related to the steel industry will follow up. Although there are many high-tech developments, steel and economy are still inseparable. Almost all the big and powerful countries in the world are big and powerful in steel. Therefore, we should have a correct understanding and judgment on the development of the steel industry. This is not only important for the healthy development of the steel industry, but also very important for the healthy development of the country

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