Overcapacity in steel exceeds imagination
Although Hebei Province has cracked down on the first shot of overcapacity in steel production, the China Iron and Steel Association is still not optimistic about the situation throughout the year. China Steel Association said yesterday that the problems faced by the steel industry could not be solved quickly, and the overcapacity and economic restructuring made the industry extremely complicated.
Li Xinchuang, executive deputy secretary-general of China Iron and Steel Association, said yesterday that “overcapacity in the industry may be beyond imaginationâ€, while the steel industry is facing the slowdown in China’s economic growth and structural adjustments, and under the influence of policies to close old capacity. Extremely complicated situation. Last year, China's steel production capacity exceeded 300 million tons, equivalent to nearly twice the capacity of the EU.
China Iron and Steel Industry Association's forecast shows that domestic iron ore imports are expected to increase by 6% year-on-year to 870 million tons in 2014, an increase of 4 percentage points from 10.2% in 2013. It is expected that steel production will slow down this year, possibly reaching about 3%, and the output will be 810 million tons. This year, demand for steel products will increase by 3.2% to 715 million tons, and production and demand are still oversupply.
Li Xinchuang said that personnel resettlement is the first issue to be considered when steel production capacity is withdrawn. According to the task arrangement of Hebei Province, Tangshan City will reduce its steel production capacity by 40 million tons within five years. After the completion of the task, more than 100,000 people will need employment placement. In addition, debt risk is one of the risks that steel production needs to be prevented from exiting. At present, the debt ratio of China Steel Association members is as high as 70%, and the total loan amount is 1.3 trillion yuan. Coupled with non-member companies, the total industry debt may exceed 2 trillion yuan.
Li Xinchuang believes that although China's steel enterprises have shown obvious differentiation, there will not be a large number of bankrupt enterprises in the short term, and there is no possibility of systemic risks. However, individual projects may cause local risks and should be vigilant. The state should formulate the exit mechanism for the steel production capacity of the system as soon as possible.
It is worth noting that in the past year, although the state has pushed for mergers and acquisitions in the steel industry, the effect is not obvious. According to the report released by the Raw Materials Department of the Ministry of Industry and Information Technology, the economic operation of the steel industry in 2013, the steel industry is still expanding in 2013, the new capacity is still rising, and the concentration of the domestic steel industry is not rising and falling, and the top ten crude steel production The output of the iron and steel enterprise group accounted for 39.4% of the national total, down 6.5 percentage points year-on-year. The report also said that the top 30 crude steel production accounted for 55.1% of the total output, down 5.9 percentage points; the top 50 accounted for 65.3%, down 4.6 percentage points, "industrial concentration decreased, which intensified market competition." It is reported that more and more enterprises will focus on high-end products, and even repeat research and development of other companies' products, resulting in higher quality homogenization competition.
At the same time, in the case of severe overcapacity in the industry, most steel products are in surplus state, among which high-grade sheet metal and fine-oriented electrical steel and non-oriented electrical steel are currently oversupply. In addition, the vicious competition in the steel market is worthy of attention, and the price war of enterprises has intensified. The long-term implementation of the principle of not giving money and not shipping by steel companies has been difficult to adhere to in some varieties.
Li Xinchuang, executive deputy secretary-general of China Iron and Steel Association, said yesterday that “overcapacity in the industry may be beyond imaginationâ€, while the steel industry is facing the slowdown in China’s economic growth and structural adjustments, and under the influence of policies to close old capacity. Extremely complicated situation. Last year, China's steel production capacity exceeded 300 million tons, equivalent to nearly twice the capacity of the EU.
China Iron and Steel Industry Association's forecast shows that domestic iron ore imports are expected to increase by 6% year-on-year to 870 million tons in 2014, an increase of 4 percentage points from 10.2% in 2013. It is expected that steel production will slow down this year, possibly reaching about 3%, and the output will be 810 million tons. This year, demand for steel products will increase by 3.2% to 715 million tons, and production and demand are still oversupply.
Li Xinchuang said that personnel resettlement is the first issue to be considered when steel production capacity is withdrawn. According to the task arrangement of Hebei Province, Tangshan City will reduce its steel production capacity by 40 million tons within five years. After the completion of the task, more than 100,000 people will need employment placement. In addition, debt risk is one of the risks that steel production needs to be prevented from exiting. At present, the debt ratio of China Steel Association members is as high as 70%, and the total loan amount is 1.3 trillion yuan. Coupled with non-member companies, the total industry debt may exceed 2 trillion yuan.
Li Xinchuang believes that although China's steel enterprises have shown obvious differentiation, there will not be a large number of bankrupt enterprises in the short term, and there is no possibility of systemic risks. However, individual projects may cause local risks and should be vigilant. The state should formulate the exit mechanism for the steel production capacity of the system as soon as possible.
It is worth noting that in the past year, although the state has pushed for mergers and acquisitions in the steel industry, the effect is not obvious. According to the report released by the Raw Materials Department of the Ministry of Industry and Information Technology, the economic operation of the steel industry in 2013, the steel industry is still expanding in 2013, the new capacity is still rising, and the concentration of the domestic steel industry is not rising and falling, and the top ten crude steel production The output of the iron and steel enterprise group accounted for 39.4% of the national total, down 6.5 percentage points year-on-year. The report also said that the top 30 crude steel production accounted for 55.1% of the total output, down 5.9 percentage points; the top 50 accounted for 65.3%, down 4.6 percentage points, "industrial concentration decreased, which intensified market competition." It is reported that more and more enterprises will focus on high-end products, and even repeat research and development of other companies' products, resulting in higher quality homogenization competition.
At the same time, in the case of severe overcapacity in the industry, most steel products are in surplus state, among which high-grade sheet metal and fine-oriented electrical steel and non-oriented electrical steel are currently oversupply. In addition, the vicious competition in the steel market is worthy of attention, and the price war of enterprises has intensified. The long-term implementation of the principle of not giving money and not shipping by steel companies has been difficult to adhere to in some varieties.
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