The “de-capacity” test and opportunity of the steel industry coexist

In order to further study the status quo and impact of de-capacity in the steel industry, and better serve macro-control and government decision-making, according to the “Notice on Conducting Research on the Impact of De-capacity on Economy and Price in the Steel Industry” by the Shandong Price Monitoring Center, August 23 On the 31st, the Tai'an Municipal Price Bureau organized a special research group to go to Feicheng Shiheng Special Steel Group Co., Ltd., Taishan Steel Market Yinglida Building Materials Co., Ltd. and Jieli Materials Co., Ltd. to conduct research and research. The forums such as the reform and the letter were held.

In the past three years, Taian Iron and Steel Industry has solved the problem of excess capacity

Shandong Shiheng Special Steel Group Co., Ltd. is a steel producing enterprise in Tai'an City. It is a large-scale iron and steel complex integrating iron making, steel making, steel rolling, power generation, machinery manufacturing, private capital and steel logistics. The registered capital is 1 billion yuan. The renminbi has more than 6,000 employees. In accordance with the requirements of the “Implementation Plan for the Elimination of Compressed and Outdated Production Capacity of the Iron and Steel Industry in Shandong Province”, the company removed a 65-ton electric furnace ahead of 2014 and eliminated the backward production capacity of 600,000 tons. It has been approved by the provincial expert group, and will be accepted in 2016 and 2017. No capacity task. In terms of production, the company's crude steel output in 2014, 2015 and 2016 was 3.157 million tons, 3,314,900 tons and 3.541 million tons respectively.

The reason why the production capacity did not cause the production to go is because the company succeeded in improving the production capacity through technological innovation and technological advancement without new ironmaking steelmaking equipment. Through the use of blast furnace oxygen-enriched coal injection technology, blast furnace optimization fabric matrix to reduce fuel consumption, advanced smelting operation technology, blast furnace high pressure energy-saving technology, blast furnace blower potential energy-saving technology and other technological innovations and technological advances have improved the blast furnace capacity and improved the annual production capacity of pig iron By optimizing the converter furnace capacity ratio, increasing the tapping capacity of the converter, tapping the potential to increase production, optimizing the oxygen supply operation of the converter, shortening the smelting cycle, increasing production, using the new process of residue retention operation, shortening the auxiliary time of the converter, and improving the management level by using audio slag technology and upgrading management level. The horizontal steelmaking system integrates and raises production, which increases the capacity of the converter and improves the steelmaking capacity.

In recent years, steel prices are basically in a volatile upward trend.

It can be clearly seen from the above figure that the steel price trend since 2015 has the following characteristics: First, multiple fluctuations, but the overall trend of the curve is rising; second, the “Golden Three Silver Four” and “Golden September Silver” and “Spring Festival” in previous years. In the peak season, the characteristics of the law gradually weakened. Third, the increase in the amount of steel in March 2017 was significantly expanded. The average price of steel rose from 3,000 yuan per ton at the beginning of the year to 3,900 yuan per ton, an increase of 30%.

The current round of steel price increases mainly has the following four reasons: First, the raw material supply price has increased by a large margin. The main raw materials for the steel industry are iron ore and coke, which both rose significantly in 2017. The price of iron ore reached 73 US dollars per ton, a year-on-year increase of 25.9%; the price of coke reached 1780 yuan, a year-on-year increase of 52.1%; the second is the temporary improvement of supply and demand pattern. On the one hand, the production capacity continued to advance. On the other hand, with the deepening of environmental supervision, some steel mills that failed to meet the pollution standards were shut down and rectified, resulting in a reduction in the supply of steel and an improvement in the pattern of oversupply. Pull up demand. In the early period, the steel market was sluggish, and the middle merchants generally had low stocks. Under the favorable market situation, enterprises had the need to replenish stocks; fourth, market confidence was boosted. In the first half of the year, the macro economy was running smoothly, and the low inventory of steel was superimposed. The profits of both production companies and middlemen increased, so the market was positive.

To sum up, the current rise in steel prices is a comprehensive result of short-term factors, in line with the trend of stable economic growth and increasing demand. However, in the long run, it is still necessary to be cautiously optimistic about steel prices. The following factors should be considered:

On the demand side: steel exports fell. Statistics show that China exported 47.95 million tons of steel from January to July, down 28.7% from the same period of last year. Steel demand is still dominated by the domestic market. There is uncertainty in the real estate market. The correlation between steel prices and real estate investment is very high. The rebound of the steel market in 2016 is closely related to the recovery of the real estate market. However, the current real estate market in the country is showing a cold trend under the influence of the financial bar policy and the property market regulation policy. It is expected that the real estate market will enter the adjustment phase in the future. On the supply side: On June 30, the deadline for clearing strip steel has passed, and the supply gap of the strip steel will be gradually filled, and there is still pressure on the supply and demand of steel in the medium and long term. The de-capacity is not a one-off event. The market is still full of variables in the later period. It is expected that the steel market will fluctuate in the second half of the year.

De-capacity is both a test and an opportunity for the development of the steel industry.

At the beginning of 2016, the steel industry market was sluggish and vicious competition was serious. The price of steel was not as good as the price of cabbage. With more than one year of capacity work, the contradiction between supply and demand has been alleviated, steel prices have rebounded, and the industry has turned losses into profits and benefits have improved. Through investigation, the changes in the steel industry are mainly reflected in three aspects:

The pricing method is gradually changed from agreement pricing to spot pricing and a single price. The price of steel is no longer a “one-word hall” for steel mills. The business roles of dealers and steel mills are gradually changing. The dealers gradually change from passive purchases to active demand adjustments. The new pricing and ordering methods have alleviated the tight capital situation of dealers. It also stimulated the enthusiasm of steel mills for shipment. Steel mills actively contact dealers and actively expand the market. Distributors can also reasonably select the specifications and quantity of goods according to their own sales opportunities.

Industry information is more transparent, and dealers' purchase channels are broadened. The establishment of some large professional websites makes the industry information more transparent. For example, China Steel Online not only publishes the prices of various steel products of dozens of large steel mills in China, but also helps dealers find sources of goods and place orders online. Dealers can quickly grasp market price changes through WeChat, network and other channels, and rationally adjust inventory, especially for enterprises that use their own funds to operate and have fixed sales customers to effectively reduce business risks.

Sales competition has intensified and corporate inventories have fallen. The rise in the price of steel directly intensifies the competition of dealers. Therefore, sellers choose to represent single or a small number of steels, which increases sales limitations. At the same time, in the context of increasingly transparent purchase prices, dealers need to reduce the purchase price. Proportion, small profits but quick turnover. At the same time, due to frequent price fluctuations and no risk reduction, distribution companies choose to operate at low inventory levels.

In summary, the development of the steel industry has brought both opportunities and challenges. To achieve more long-term development, distribution companies must be more proactive in adapting to changes in the industry: First, we must do a good job in information warfare, pay attention to the trend of steel prices through various methods of online media, grasp the law of price changes, and rationally adjust inventory; second, strict regulation Select upstream steel mills and downstream steel enterprises to avoid selecting enterprises that do not meet the pollutant discharge standards, so as not to affect their own purchase and supply; thirdly, rationally grasp the business scope according to their own economic strength, actively reduce operational risks, and avoid blind fund raising and follow suit. Rational competition.

Industrial upgrading and competitiveness are the ultimate destination for development

According to the statistics of the National Development and Reform Commission, as of the end of May, the country has completed 42.39 million tons of crude steel capacity reduction task, and the annual target of 50 million tons has been completed 84%. The original clearing site originally scheduled to be completed on June 30 The task of strip steel has also been completed ahead of schedule. The completion of production capacity in the steel industry exceeded expectations, and the task of de-capacity achieved a staged victory. However, in order to achieve sustainable and healthy development of the steel industry, industrial upgrading and competitiveness improvement is the ultimate goal.

Implement market-based industry support policies. Adopt the principle of “market-based, moderate government support” to establish a fair and reasonable competitive environment, and promote resources to optimize allocation according to market mechanisms to promote the survival of the fittest. On the one hand, the market plays a decisive role in allocating resources, guiding investment, and surviving the fittest. On the other hand, the government supports policy reform to support steel enterprises to carry out transformation and upgrading, and solves the problem of employee resettlement, transfer, and skills through special subsidies and precise assistance. Training issues.

Promote mergers and acquisitions between steel companies. Low industry concentration is an important reason for China's steel industry to go to bad competition. Improving industrial concentration is a necessary condition for the sustainable and healthy development of the steel industry. Through mergers and acquisitions and asset optimization and allocation, we will promote the concentration of high-quality resources to advantageous enterprises and achieve high-quality integration of steel enterprises, which will not only improve the bargaining power of imported iron ore, but also effectively reduce the homogenization competition in the region and improve the self-discipline and limits of enterprises. The ability to produce insurance prices guides enterprises into a benign competition. Through mergers and acquisitions, the state can plan the national steel industry as a whole, and realize the structural adjustment and layout optimization of the steel industry while de-capacity and production control.

Promote technological innovation in steel companies. Throughout the road to de-capacity in the steel industry in developed countries, technological innovation is its core means. Iron and steel enterprises should establish industrial technology innovation alliances, strengthen the synergy between upstream and downstream industries, promote the research and development of steel products, focus on the future needs of the market, expand the production of high-end products, achieve product upgrading, and improve the core competitiveness of steel enterprises.

Carry out international capacity cooperation and realize the transfer of excess capacity. Iron and steel enterprises should seize the development opportunities of “One Belt, One Road” and formulate strategic plans and implementation plans for international development. Through investment, acquisition, contracting projects and establishment of overseas production and processing bases, marketing networks and R&D centers, enterprises will “walk”. Going out, while expanding product exports, we will realize the export of technical standards and services and enhance the international competitiveness of enterprises.

                                                      --Excerpt from China Metallurgical News

    Xi'an Pengyuan Metallurgical Equipment Co., Ltd. was established on February 20, 2017. The company is located in Xi'an, Shaanxi, China. Its main business is the design and manufacture of metallurgical equipment (electric arc furnace, submerged arc furnace, ladle refining furnace, other refining furnaces and metallurgical auxiliary equipment). The company's vision is to become a service-oriented leading enterprise that can provide users with advanced and applicable complete smelting technology solutions. The company is determined to make “Pengyuan Metallurgy” into the electric furnace industry. Excellent brand. Pay attention to us, keep abreast of the latest developments in the industry, and consult the hotline: 13891839310.