Director General of the International Steel Association: China's steel industry restructuring is imperative
The weakness of the Chinese steel market is well received by the industry, which has become the focus of discussion at the 10th China Steel Annual Meeting.
“Restructuring and integration of China's steel industry is imperative. This is not only a problem for China, but also for the global steel industry.†At the annual steel meeting held on October 21, the Director General of the World Steel Association, Edwin Basson (Edwin Basson) ) said.
The importance of China, which accounts for nearly 50% of the global steel market, is self-evident. China's steel industry has entered the downward channel. The industry has overcapacity and serious losses. It is not uncommon for small and medium-sized steel companies to go bankrupt.
Xu Lejiang, chairman of Baosteel Group, said in his speech that in the future, the domestic steel industry will certainly undergo mergers and acquisitions, but this will be very different from the previous mergers of Bayi Steel and Handan Iron and Steel for the purpose of expanding production capacity.
The latest forecast from the worldsteel said that if China's demand is not included, the global demand for steel will fall by 0.2% this year, less than the 1.7% decline in China. This means that China has become a drag on the growth of global steel demand.
Xu Lejiang said that the domestic steel industry has entered the cold winter from the late autumn two years ago, and the industry is thinking about how to spend the winter. In the first eight months of this year, the industry lost 18 billion yuan, compared with 14.6 billion yuan in the same period last year.
The severe overcapacity in the domestic steel industry has become the main cause of the market downturn. After the crude steel output reached an all-time high of 820 million tons last year, domestic steel supply also began to decrease. According to statistics from the China Iron and Steel Association, in the first eight months of this year, domestic crude steel output was 543 million tons, down 2% year-on-year.
Edwin Bassong believes that countries around the world, including China, have the need to reduce steel production capacity, but this does not mean the allocation of capacity reduction, but should let the market decide to achieve the balance of supply and demand in the steel industry.
On a global scale, the capacity reduction caused by the imbalance between supply and demand in the industry has also appeared in many mature markets, and its experience is also worth learning from the Chinese steel industry in the cold winter.
Kinya Yanagagwa, deputy director of Nippon Steel & Sumitomo Kim, said that after the Second World War, with the expansion of steel demand, Japan’s crude steel production has been in a state of high growth. After reaching the peak of production in the 1970s, the turning point of steel demand began to decline. .
In the case that the company can still ensure profitability, Nippon Steel & Sumitomo Metal Co., Ltd. decided to reduce steel production capacity through centralized and large-scale equipment. This means more money is required. The data provided by the company shows that its current number of blast furnaces is only half that of the 1970s. At that time, other steel companies in Japan also carried out work to reduce steel production capacity.
Europe, the United States, etc. have also experienced areas where the steel industry has adjusted, and its capacity reduction plan is not going well. Edwin Basso said that when Europe reached the peak of steel demand in 1973, it was initially unwilling to admit this reality. It believed that market demand was only temporarily reduced, and it was not until a long time later that the steel industry recession did come, and Measures have been taken to limit new capacity and product price limits.
Yanagawa also believes that this sluggish action has led many local steel companies to be merged by capital outside Europe. The United States also began to cut production capacity after overcapacity caused losses in the steel industry, which caused the bankruptcy of many steel mills.
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