Iron and steel industry still needs to redouble its problems

Last year was a cold winter for the steel industry. Although the coldest time has passed so far, the steel industry has also bid farewell to 2012 for profit. However, the lack of demand, overcapacity, steel prices, and high ore prices are still rampant. Several "big mountains" facing the iron and steel enterprises.

Zhang Changfu, vice president of the China Iron and Steel Association, said that the overall operating environment of the steel industry this year is better than last year, and the demand for steel has increased. However, the difficulties and challenges that began last year cannot be underestimated. The seriousness of excess capacity is self-evident.

It is understood that this year the steel industry will effectively solve the overcapacity problem by expanding consumption, strictly controlling new construction, orderly transfer, promoting integration, and exiting steadily.

A. Shrinking demand in the operational data market Shrinking growth in steel production Slowed down by the international economy, China's economic growth rate dropped, negative growth in the amount of steel used in some industries, shrinking market demand, and unfavorable factors such as the drop in steel prices, the steel industry has become severe Difficult situation.

Low crude steel production growth In 2012, the country’s pig iron, crude steel, and steel production were 65.791 million tons, 71.654 million tons, and 95.86 million tons, respectively, a year-on-year increase of 3.7%, 3.1%, and 7.7%, respectively, compared with 2011. It dropped 4.7, 5.8, and 4.6 percentage points. Among them, China Iron and Steel Association members steel production 58.905 million tons of crude steel, down 0.6% year-on-year; other companies produced 12,749 tons of crude steel, an increase of 24.8%. In 2012, the large- and medium-sized iron and steel enterprises' "control of production" actions have achieved certain results.

Net exports increased by nearly 30% In 2012, China exported a total of 55.73 million tons of steel, an increase of 6.89 million tons, an increase of 14%; imported steel 13.66 million tons, a year-on-year decrease of 1.92 million tons, a decrease of 12.3%, and an imported billet of 360,000 tons, a year-on-year decrease 280,000 tons, down 43.3%; import and export net exports of 44.38 million tons of crude steel, an increase of 9.61 million tons, an increase of 27.6%, accounting for about 6.2% of the country's crude steel production.

Although steel exports increase in moderation, the export steel structure needs to be optimized. In 2012, China's steel imports averaged $1303.4/ton, export steel averaged $923.8/ton, and the average price of imports and exports was $379.6/ton, which was an increase of $43.6/ton over 2011.

Sudden increase in overcapacity pressure In 2012, the investment in fixed assets of the nation's steel industry was 658.4 billion yuan, an increase of 2.97% year-on-year, representing an increase of 12.54 percentage points from 2011. The investment in the ferrous metal mining industry was 152.9 billion yuan, an increase of 23.7% year-on-year, and the growth rate was 5.3 percentage points higher than in 2011; the investment in ferrous metal smelting and rolling processing industry was 50.5 billion yuan, a year-on-year decrease of 2.0%, and an increase of 14.6 in 2011. %.

Although the total investment in the smelting and rolling processing industry fell slightly compared with 2011, the total investment of 505.5 billion yuan is still very large, and the new production capacity created will inevitably increase the pressure of the current overcapacity.

B. Operating characteristics High cost Low price index Nearly zero growth in steel prices in 18 years Low prices of steel products Both international and domestic steel prices showed a downward trend in 2012. At the end of 2012, the international comprehensive steel price index was 175 points, down 6.3% from the end of 2011; the domestic steel comprehensive price index was 105.31 points, a 12.57% decrease from the end of 2011. On September 7, the domestic comprehensive steel price index fell below 100 points, reaching the lowest point of the year at 99.24 points, and then slowly rising, but it was still low at the end of the year.

From the perspective of the whole year, domestic steel prices have basically continued the downward trend since the second half of the previous year. The overall level is lower than that of the previous year, experienced upswings from January to April, a marked decline from May to August, and a slight rebound from September to October. From November to December, the average price of CSPI steel was 111.76 points, down by 19.28 points over the previous year, a decrease of 14.71%.

In 1994, when China established the domestic steel price index, the base number was set at 100 points. After 18 years of operation, the steel price index at the end of 2012 was only 105.31 points. The average growth rate of the steel price index was only 0.29%.

Ore prices continue their upward trend At the end of December last year, the China Iron Ore Price Index (CIOPI) was 423.38 points, up 11.52 points month on month, or 2.8%. Among them, domestic iron ore price index was 345.99 points, an increase of 9.3 points, or an increase of 2.76%, and the imported iron ore price index was 465.61 points, an increase of 12.74 points or an increase of 2.81%.

During the same period, domestic iron ore concentrate price was 890.28 yuan/ton, a month-on-month increase of 23.92 yuan/ton, or 2.76%; imported iron ore (fine ore) landed price was 125.76 US dollars/ton, up 3.44 dollars/ton from the previous month, an increase. It is 2.82%.

As of the end of last year, the inventory of imported iron ore had fallen to 73.14 million tons. Although it was down by 7.52 million tons, it was still at a relatively high level. From January to November, China’s pig iron production increased by 20.635 million tons year-on-year, while the The increase in iron ore (raw ore) reached 162 million tons, and imported iron ore also increased by 51.1 million tons. On the whole, although the ore price is in an uptrend, the domestic iron ore market has still not escaped the oversupply situation.

Loss of profit exceeds 98%

In 2012, the iron and steel enterprises of the China Iron and Steel Association members realized a total sales income of 354.41 billion yuan, a year-on-year decrease of 4.31%; a profit and tax of 74.089 billion yuan, a decrease of 54.33%, and a profit of 1.581 billion yuan, a year-on-year decrease of 98.22%. Among them, the whole industry suffered losses in January and February, slightly profitable in March, April and May, and a loss in June, July, August and September. Since late September, since the price of steel products began to rebound, the business in the fourth quarter has improved and it has achieved profitability. There were 23 cumulative loss-making enterprises throughout the year, an increase of 15 over the same period of the previous year, a loss of 28.75%, and loss of the loss-making enterprises amounted to RMB28.924 billion, a year-on-year increase of 7.39 times.

Last year, the difficult situation of the steel industry reached the "peak" at the end of the third quarter. According to the statistics released by the China Iron and Steel Association, last year from January to September, the steel industry accumulated a loss of 5.528 billion yuan, compared with a profit of 83.692 billion yuan in the same period of the previous year; losses of loss-making enterprises during the same period reached 26.726 billion yuan, an increase of 41.5 times year-on-year; It is 45%, an increase of 38.75 percentage points over the same period last year.

Even though the operating conditions of iron and steel companies have eased since last October, one-third of the iron and steel companies are still losing money as of the end of November.

C. The problem is hampered by the ups and downs of steel companies. The contradiction between supply and demand has been highlighted. Due to insufficient demand from the downstream industry, overcapacity, the contradiction between oversupply and demand in the steel market is very prominent, the sales of steel products have been extremely difficult, prices have plummeted, and the competition among enterprises has further intensified. In particular, the competition for homogenization of products has become more intense, and the steel industry has experienced difficulties that have never been seen since the new century.

According to statistics, at present, the production capacity of China's steel industry has reached 970 million tons, and the number of blast furnaces under construction in the past year has reached 39. Some people even joked that China, Hebei, and Tangshan rank among the top three in the world's steel industry with output of 700 million tons, 200 million tons, and 100 million tons of steel respectively.

According to Zhang Changfu, the overcapacity in China's steel industry includes both phased surpluses and some product surpluses. "Physical surplus is matched with China's economic development and demand growth, and some product surpluses are mainly reflected in the surplus of electrical steel and certain plate products."

Steel profits were swallowed last year. Domestic steel prices have remained low for a long time. However, as long as the price of steel products rises slightly, imported iron ore will immediately rise, and the increase will be much higher than steel prices. In October, for example, the steel price index of the China Iron and Steel Association rose by only 2.9% from the previous month, but it rose by 15.9% when the order price ratio of the imported iron ore was the lowest (in the third week of September).

In Zhang Changfu’s view, the price of steel and the price of imported iron ore are not synchronized, and the price increase of imported iron ore is far higher than the price of steel. It swallows up the meager profits of iron and steel companies and allows iron and steel companies to purchase imported iron ore. To become a high-risk game, many companies are losing money because they don't have the "off point."

It is worth noting that the price of imported iron ore rose from US$115/tonne to US$159/tonne from late December last year to mid-January of this year, rising by US$44/ton, or up to 38%. According to the calculation of 1.6 tons of iron ore per ton of steel production, the equivalent of the cost per ton of steel increased by 422 yuan, while the price of steel in the domestic market rose by only about 106 yuan per ton in the same period.

Zhang Changfu said that the sharp increase in the price of imported iron ore in this round was not caused by a major change in supply and demand, but was caused entirely by artificially high prices in the monopoly market.

According to reports, some ore supply traders are very explicit about raising the price of minerals. When the price of imported iron ore began to drop on January 16, they even bought iron ore in reverse to raise the price.

The explosive growth of trade friction Although China's steel exports increased by 14.02% year-on-year last year, foreign trade remedy surveys for exports of Chinese steel products have seen explosive growth.

China Iron and Steel Association said that in 2012 China's steel exports suffered a total of nine trade remedy investigations. The sponsors included the European Union, Brazil, Indonesia, India, Thailand, Malaysia, Australia, and Taiwan and other countries and regions. The products covered wire rods and coated plates. , plated (aluminum) zinc plate, non-oriented silicon steel and stainless steel and other varieties.

The data shows cold-rolled sheets mainly made of cold-rolled all-round sheets (rolls), galvanized sheets, and coated sheets, hot-rolled steels mainly made of alloy rods and wires, profiles, hot-rolled sheets (rolls), and tube products. In total, it accounts for about 85% of China's total steel exports.

It is worth mentioning that ASEAN officially surpassed South Korea last year to become China’s largest steel export region, and ASEAN is also the country that initiated the most frequent trade remedy for steel products in China.

Some analysis shows that China's steel exports this year will show an overall stable trend, while the iron and steel trade friction is unlikely to reduce.

Financing expensive and high tax burdens Intensified funding constraints for steel companies last year, raising the difficulty of financing. In 2012, the sales revenue of China Steel Association's member companies decreased by 4.31% year-on-year, bank loans increased by 8.6% year-on-year, and financial expenses rose by 24.29% year-on-year. At the same time, the asset-liability ratio of member companies continued to rise, reaching 68.32% by the end of 2012, an increase of 1.83 percentage points year-on-year.

In addition, high tax burdens and unreasonable local fees have further aggravated the burden on enterprises. According to reports, due to the increase in taxes on mineral resources and other taxes, the tax burden of enterprises has increased. In addition, some local governments have imposed heavy taxes on iron and steel companies to ensure that tax revenues do not reduce tax revenues for steel companies in advance. The burden makes the company miserable.

The vicious competition has become increasingly prominent Since last year, in the context of the overall recession, the vicious competition of steel companies has become more serious. This is particularly manifested in the fact that some companies do not have enough self-regulation to compete for price reductions in steel sales; some companies adopt less or no Invoices and other tax evasion measures, the sale of steel at low prices, undermined the order of fair competition; due to poor combat in some places, resulting in counterfeit, fake steel shrouded the market.

D. Operational trend market may have growth difficulties. The central economic work conference must not be underestimated. The international economic situation in 2013 remains complicated and full of variables. The world economy has entered a period of deep transformation and adjustment from the pre-crisis rapid development period. China's economic development has new opportunities to expand domestic demand, improve innovation capabilities, and promote the transformation of development methods.

Zhang Changfu stated that, on the whole, the operating environment of the steel industry this year is better than 2012, and the demand for steel products will increase by a certain amount. However, the difficulties and challenges facing the whole industry should not be underestimated: First, the demand growth in the downstream industry is flat, and it is difficult for steel consumption to increase significantly. Second, the expansion of steel production capacity has not been effectively curbed, and the situation of oversupply will not change. Third, the current situation of high cost of raw materials is difficult to change, and it will be difficult to form a fair and transparent import of iron ore; Fourth, homogenization of products. The competition is fierce, and the vicious competition among enterprises has not yet been resolved. The establishment of a fair competition order in the industry remains to be further deepened by the country's reforms.

Regarding the trend of imported iron ore that staged a crazy scene at the beginning of the year, Zhang Changfu stated that taking into account the current lack of demand in the steel industry, excessive production capacity, and the reality of a sharp drop in steel prices, there is no reason to support the continued rise in iron ore prices. This year, the overall import ore prices have shown a downward trend. "Of course, to maintain a reasonable level of iron ore prices, we must rely on the domestic iron and steel enterprises to make their own efforts, but also need to strengthen market supervision, and the international mining giant must also clearly understand that the absolute monopoly of iron ore resources is not sustainable. ”

E. Proposal to transfer structural innovations to drive new developments In 2013, domestic and international market conditions were difficult to improve fundamentally, and the steel industry still faced severe challenges. The entire industry should regard “turning modes, optimizing structure, improving quality, and increasing profits” as a whole. The focus of the year's work is to accelerate scientific and technological innovation, strengthen product innovation, management innovation, and business model innovation, and strive to realize new developments driven by innovation in China's steel industry.

Exploring the development of new models First, in accordance with the “two-in-one” goal set forth by ***, the quality of urbanization has been significantly improved, and the level of opening to the outside world has been further enhanced. It explores the opportunities and challenges faced by the development of the iron and steel industry: Second, it is profound. Summarize the experience and lessons learned from the development of China's iron and steel industry in the new century, break through the difficulties in the development of the industry, consider the directions and priorities for the development of the iron and steel industry in the next decade, explore the laws of development, and innovate the development concepts of the industry and the enterprise. Third, study the development of the ecological civilization in the steel industry. The historical responsibility for building beautiful China should be shouldered, as well as the opportunities, pressures, and challenges faced by it; Fourth, the level of opening up of China's iron and steel industry should be further improved, and the problems and measures that need to be solved in implementing the “going out” development strategy should be studied.

Resolving Overcapacity Reporters learned that in order to resolve the problem of overcapacity, this year the China Steel Association will actively cooperate with the National Development and Reform Commission, the Ministry of Industry and Information Technology and other relevant ministries and commissions to study and implement the "return mechanism" proposed by the Central Economic Work Conference to make full use of the international financial crisis. Investigating and resolving the contradiction of overcapacity as a key issue for the industry; as an important task in resolving the oversight of iron and steel enterprises in line with the "Code for Steel Industry Regulations", and carefully ascertaining the status quo of the development of iron and steel enterprises as the norm. To provide basis for the formulation of policies and measures for production and development of iron and steel enterprises, elimination of outdated production capacity, etc.; to cooperate with the Ministry of Industry and Information Technology, etc. to do a good job in the "Guidance Opinions on Accelerating the Promotion of Mergers and Acquisitions in Key Industries," and to strengthen the research on the merger and reorganization of iron and steel enterprises and timely reflect the Appeal.

Zhang Changfu suggested that the government authorities and the steel industry should fully respect the laws of the market and gradually resolve the overcapacity problem in the steel industry by expanding consumption, strictly controlling new construction, orderly transfer, promoting integration, and steady exit.

In response to trade frictions, I faced nine trade frictions with China's steel exports last year. This trade protectionism against China's steel products will continue this year.

In the near future, the EU has made unprovoked attacks and launched a "double counter" investigation on organic coated steel products imported from China. For the EU's proposal of "the Chinese government subsidizing organic coated steel production enterprises," the Chinese Steel Association firmly opposed. “Actually, the tax burden on Chinese steel companies is not too light, but rather heavy, including high tax burdens and unreasonable fees in some places,” Zhang Changfu said.

He also stressed that due to the high price of imported iron ore, the Chinese government does not support steel exports in policy orientation. At the same time, Chinese steel companies have consistently adhered to international trade practices and rules. Once trade frictions occur, they advocate dialogue and consultation, do not fight trade wars, and do not provoke trade disputes.

The China Iron and Steel Association suggested that if trade frictions are encountered, steel companies should use legal means to actively respond to complaints, and implement orderly exports at the height of the industry; at the same time, further adjust product mix to better adapt to market demands. In addition, in addition to strengthening the assessment of the hard environment of exporting countries and regions markets, customers, etc., we must also pay attention to the soft environment of market policies, laws, and culture.

Promote industry self-regulation First, strengthen industry economic operation monitoring and analysis, pay close attention to market trends and economic performance, strengthen research on trends and trends, release relevant analysis reports in a timely manner, and guide enterprises to properly carry out business decisions; second, regular organization of enterprise seminars Negotiate, reasonably control production capacity, standardize sales behaviors, research and rationalize the formation mechanism of iron and steel product prices, maintain the overall interests of the industry, and avoid vicious competition; Third, strengthen supply and demand coordination in the domestic market and maintain market stability, with emphasis on strengthening supply and demand coordination in the sheet metal market; It is an orderly and orderly advancement of export of steel products. While strengthening export warnings, it focuses on the exchange of information among exporting production companies, as well as communication with major exporting countries or regional iron and steel organizations to increase understanding and reduce friction.

Expanding the Trading Volume of Iron Ore Trading Platform Since the official launch of the iron ore trading platform in May last year, China's iron ore spot trading platform has been operating for eight months in the “controversy”, during which there have been zero and zero trading months. Hey.

Just on February 25 this year, Singapore has officially launched the iron ore market. Faced with a severe competitive environment, the primary task of this year's “China Iron Ore Platform” will be to effectively expand the trading volume of the platform, which is a prerequisite for expanding its influence.

The China Iron and Steel Association suggested that in order to expand the trading volume of the “China Platform”, it is necessary to guide member companies, especially large companies, to take the lead in increasing the volume of purchases, set the proportion, and earnestly implement them; it is also necessary to encourage major foreign iron ore suppliers abroad to increase their platform. On the amount of resources put on.

Strengthening scientific and technological innovation First, accelerating the improvement of the technological innovation system that combines enterprises as the main body, market orientation, production, education, and research, and give full play to the main role of enterprises in scientific and technological innovation, and promote the construction of innovative enterprises; secondly, strengthen the “twelve V. The National Science and Technology Support Plan Project organizes and implements, increases the evaluation of major common scientific and technological achievements in the industry, conducts industry scientific research and technological exchange activities, and accelerates the popularization and application of scientific and technological achievements; Third, it promotes energy conservation, emission reduction, and comprehensive utilization of resources, and continues to organize large-scale energy consumption. The fourth is to implement innovation-driven development strategy, promote industry scientific and technological progress and management innovation, and use the national talent engineering project to further strengthen the training of urgently needed talents and innovative high-end talents in the industry.

In the new year, in the face of a more severe market situation, Maanshan Iron and Steel Rolling Mill has started to strengthen management innovation, technological innovation and idea innovation, and has comprehensively refined, decomposed, and implemented various responsibility measures to strongly promote the reduction. This efficiency improvement work. Last year, the factory took the lead in increasing the profitability of tons of materials, increased the potential for benchmarking and structural readjustment, and achieved good results with a year-on-year reduction of RMB 238 million. The picture shows the corner of Masteel's four-steel rolling sheet continuous retreat line.