China's steel industry has entered a period of deep adjustment, how to break the situation of transformation and development?

(Economic Watch) China's steel industry has entered a period of deep adjustment, how to break the situation of transformation and development?

Beijing, March 3 (ZXS) -- Question: China's steel industry has entered a period of deep adjustment, how to break the situation in transformation and development?

China News Agency reporter Pang Wuji

China's steel industry has faced major challenges. In 2022, affected by factors such as slowing macroeconomic growth, repeated epidemics and shrinking downstream demand, the production and operation of steel enterprises will be affected. Last year, the overall revenue of steel enterprises of China Iron and Steel Association was 65875,6.4 billion yuan (RMB, the same below), down 982.72%; Total profit was RMB<>.<> billion, down <>%.

Rising costs, declining profits, sluggish demand, increased resource and environmental constraints... How to break the transformation and development of the steel industry? At the 2023 (<>th) China Steel Development Forum held recently, a number of industry experts took the pulse of the strategic transformation of the steel industry.

Promote the dynamic balance of supply and demand

Lu Chunfang, academician of the Chinese Academy of Engineering and director of the Engineering Management Department of the Chinese Academy of Engineering, said at the forum that at present, the development of China's steel industry has gradually entered a period of deep adjustment.

For the steel industry, which was once mired in the vortex of overcapacity, the balance between supply and demand is regarded as the key word for the high-quality development of the industry.

From the supply side, Luo Tiejun, vice president of the China Iron and Steel Association, stressed that the first is a new mechanism for capacity governance. The China Iron and Steel Association put forward the proposal to accelerate the creation of a new mechanism for the governance of steel production capacity in the new development environment, with the aim of making the reasonable release of steel production capacity in accordance with market demand. The key to creating a new mechanism is to form an industry consensus mechanism that constrains production capacity and output, leading to the survival of the fittest and the balance of supply and demand.

Zhang Haideng, deputy director of the Department of Raw Material Industry of the Ministry of Industry and Information Technology, also pointed out that it is necessary to continue to consolidate the results of steel capacity reduction. Strictly implement capacity replacement, strictly prohibit new production capacity, strengthen industry self-discipline, and improve the long-term mechanism of market-oriented legalization.

On the demand side, Luo Tiejun pointed out that since China's crude steel production reached a peak of 2020.10 billion tons in 65, it has fallen for two consecutive years, "on the surface, it is the reason for limiting production, but it is actually caused by the decline in downstream demand."

How to expand domestic demand for steel? Zhang Haideng said that it is necessary to continue to pay attention to the transformation and upgrading of the downstream industry, new needs and new changes, increase innovation, strengthen upstream and downstream industrial chain cooperation, continuously improve the ability of steel material support, and ensure that the supply and demand of the industry always maintain a dynamic balance.

Fan Tiejun, president of the Metallurgical Industry Planning and Research Institute, listed two ways to expand demand. The first is to promote the application of steel structure. Steel structure houses have multiple advantages such as low emissions, automated standardized production, and easy recycling and reuse, which are the focus of future promotion and application. Second, the industrial chain is coordinated and high-end. Through the linkage of upstream and downstream, promote the extension of the industrial chain to high-end user embedded, create new application scenarios for downstream products, and promote downstream products to enhance international competitiveness, expand domestic demand and expand exports.

Increase mergers and acquisitions

China's steel industry has a large number of enterprises and low industry concentration, on the one hand, it is easy to trigger disorderly competition of steel companies, "price war", on the other hand, it will also be scattered in the field of iron ore and other raw materials in the field of foreign discourse.

Zhang Haideng said that in the next step, the steel industry should further deepen the reform of mixed ownership, continue to strengthen mergers and reorganizations, build a number of world-class steel enterprise groups, form a number of world-class leading enterprises in professional fields, and change the "small scattered" situation of the steel industry in some regions through mergers and reorganization.

Fan Tiejun believes that China Steel has entered an important window period and a period of historical opportunity for mergers and acquisitions. Through the implementation of mergers and reorganization, further expand the scale of enterprises, which is conducive to concentrating R&D forces and conquering cutting-edge technologies, "stuck neck" technologies and products. From the perspective of enterprise structure, he believes that in the long run, it will form a "three-point world" in which leading enterprises build an ecosystem, professional enterprises stabilize the industrial chain, and homogeneous enterprises fight for the cost line.

Lay out green and low-carbon as soon as possible

With the demand for low-carbon steel in downstream industries such as automobiles and construction, the low-carbon steel market has opened a new round of competition.

Mao Xinping, academician of the Chinese Academy of Engineering and tenured professor at the University of Science and Technology Beijing, said that carbon neutrality is a national development strategy, and the steel industry, as a typical resource- and energy-intensive industry, is the "main battlefield" for China to achieve carbon neutrality. At present, social development and market users put forward urgent needs for ecological steel materials, with urgent time and strong requirements. The low-carbon development of the steel industry is imminent, which is an important issue related to the survival of enterprises.

Zhong Shaoliang, Deputy Director-General of worldsteel and Chief Representative of the Beijing Representative Office, pointed out that from the perspective of the downstream industry, almost all multinational car companies have officially announced carbon neutrality action plans, aiming to achieve carbon neutrality from 2040 to 2050, and the construction industry has also begun to act, and the pace of low-carbon transformation of the global steel industry has accelerated.

Zhong Shaoliang believes that the low-carbon transition will bring historic opportunities for new energy and infrastructure steel. However, he reminded that most Chinese steel companies and Southeast Asian steel companies still lack attention to low-carbon transformation and are still waiting and seeing. This can deprive businesses of a competitive advantage.

On the new track of low-carbon development, Mao Xinping said that the preparation of high-performance materials from recycled steel raw materials (scrap) is an inevitable choice for China's steel industry, and should be laid out as soon as possible. (End)