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[industry dynamics] the new version of steel development guidance or the end of the year

Date: 2018-05-18
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The reporter is informed that China's relevant departments are studying the development guidance of the steel industry in the new stage.The guideline will be led by the national development and reform commission, the ministry of industry and information technology and other departments. Relevant associations will work together to formulate the guideline, which is expected to be issued as soon as the end of this year.

Authorities, on the one hand, the overall economic structure adjustment, on the other hand, crude steel production capacity changes, the contradiction between supply and demand of led industry change, therefore, to study under the new economic environment of the steel industry development direction in the future.

All united metallurgical chamber of commerce zhi-xiang zhang says, as this year to reduce 30 million tons of production capacity, the steel industry will be completed in advance after the steel industry adjust upgrade planning (2016-2020) "in the reduce of 100 million - 150 million tons of production capacity to the target.

Zhi-xiang zhang said that the iron and steel industry development environment and is already three years ago, the supply and demand levels from serious surplus into a relative balance, enterprise management benefit from small profit to achieve reasonable profit level, high quality development stage of industry from the out of phase.

Full crucial to productivity since 2016, China's steel production capacity was completed in 2016 to only 2016 tons, then completed in 2017 to production capacity of 55 million tons, at the same time, comprehensive encirclement and suppression "DeTiaoGang" action, direct removal capacity of 140 million tons.This means that if the target of 30 million tons is achieved by 2018, the total capacity of the steel industry will reach nearly 300 million tons.

"In the past two years, crude steel production capacity has been reduced by more than 20%, and capacity utilization rate has increased from about 70% in 2015 to 80% in 2017, basically entering a reasonable range.""Said zhang.Planning institute of metallurgy industry, according to data from the previous because of domestic macroeconomic situation and the main development of the downstream steel industry is much better than expected, China in 2017 the total consumption of steel 725 million tons, up 7.7% from a year earlier, compared with that same year 832 million tons of crude steel production in China compared with the basic balance.

However, it is worth noting that since 2018, steel enterprises have shown a strong impulse to expand production capacity.According to cisa, China produced 212 million tons of crude steel in the first quarter of this year, up 5.4 percent year on year, with an average output of 2.3572 million tons per day, the highest in the same period in history.

"We need to firmly resolve overcapacity, resolutely prevent the resurgence of 'tieban steel', strictly prohibit new capacity, and implement capacity replacement."Liu zhenjiang, secretary general of the China iron and steel association, said the rapid growth of crude steel output in 2018, driven by profits, will increase downward pressure on the market.

It is understood that in addition to consolidating the production capacity results, deleveraging and preventing financial risks;Accelerate the merger and reorganization of steel enterprises, further increase the concentration;The development of scrap iron and steel industry, the development of high quality steel and other aspects or the focus of new guidelines.

"Relevant departments are further studying ways to promote the merger and reorganization of enterprises."Zhi-xiang zhang said that the steel industry need to increase the intensity of resource integration, reduce and avoid the homogeneity competition, promote enterprise merger and reorganization, the formation of several bigger production of iron and steel group, further improve the industrial concentration.

For example, supporting qualified enterprises to implement cross-regional and cross-ownership merger and reorganization may also provide some support in financial policies and land use, zhang said.

Multiple measures should be taken to speed up the deleveraging of steel enterprises, and preventing financial risks is also an important aspect of the future.According to zhang, xu lejiang, vice chairman of the China federation of industry and commerce, pointed out in his previous research visit to the chamber that the central government should follow the central government's measures to guard against financial risks, actively reduce the leverage ratio and reduce the debt ratio of steel enterprises.

In the recently held cisa "steel industry financial work forum" on, liu zhenjiang also said that we are in structure adjustment, production structure has passed to capacity improved obviously, but other structural problems remain to be gradually solved.One of the important points is the prominent contradiction in capital structure, high asset-liability ratio and heavy financial burden.

Mr. Liu said the steel industry aims to reduce the average asset-liability ratio to less than 60% after three to five years of effort.Over the past year, steel enterprises have been actively deleveraging, and the average asset-liability ratio of the steel industry has dropped by 2.59 percentage points compared with the same period last year, but it is still at a high level, reaching 67.23 percent.

"The steel industry will spend 84.82 billion yuan on interest alone in 2017," Mr Liu said, adding that the companies had high financial costs and that the debt restructuring of long and short loans had not been completed.From the point of the average annual cost of capital rate, it rose from 5.06% in 2016 to 6.22% in 2017, the annual capital cost rate is higher in March this year to 7.22%, far higher than one-year bank lending rate 4.35%.

Said liu zhenjiang, in the process of the production capacity will increase to the debt disposal level, further coordinate to carry out the sign debt stock solution with banking institutions, the authors efficiency, adjust the investment strategy, such as increasing the proportion of direct financing ways to leverage.

"Despite the changes, the main contradictions and development pressures in the steel industry remain."Zhi-xiang zhang said that the current steel quality stability, uniformity and the use of performance, service life and the actual needs and expectations and gap, cannot satisfy the construction of modern economic system of the higher demand for steel products with high quality.

In addition, zhang zhixiang pointed out that it is also necessary to identify the development direction, product structure, short process steelmaking ratio, green friendly development and application of information network technology under the new situation.

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