After hitting the lowest point in 2015, China’s iron and steel enterprises have achieved better and better performance in the past three years. Undoubtedly, price is the most intuitive manifestation. However, while filling the profits of steel enterprises, the higher the price, the better.
“The effect of the steel industry has indeed been significantly improved due to the increased efforts to reduce production capacity and the stable development of the economy as a whole. However, when steel prices are rising a lot, market risks are also increasing.”On the morning of November 25, li xinchuang, President of the institute of metallurgical industry planning and research, made such an opening speech.
Li xinchuang delivered a speech at the 14th bohai rim steel market BBS and Lange steel network 2018 annual conference.In the steel industry ushered in the best performance of the decade, such an opening, no doubt to the audience of more than 2,000 steel practitioners to do a profound reminder.
Li xinchuang, an authority on the industry, said that although the industry is recovering, steelmakers should keep a clear head because of problems and challenges such as environmental protection, the urge to expand production capacity and the high debt ratio.
The price of steel is too high or too low to be reasonable
In Mr. Li’s view, steel prices are too low and too high to be sustainable.”When prices were too low, we thought it was reasonable to go back,” he told the national business daily. “now if prices are too high, it is reasonable to go down.”
China’s iron and steel industry suffered heavy losses in 2015, with the loss of 140 yuan per ton of steel smelted, said liu zhenjiang, party secretary and secretary-general of the China iron and steel association on Nov. 24.
However, with the implementation of the supply-side reform in 2016, China’s iron and steel industry has rapidly reversed the unsustainable situation in 2015. In 2016 and 2017, China’s iron and steel industry has made a turnaround for two consecutive years and made further progress in 2018.
In the first three quarters of this year, cisa member enterprises achieved sales revenue of 3.06 trillion yuan, up 14.47% year on year.Profits and taxes reached 346.681 billion yuan, up 68.20% year on year.The total profit was 229.963 billion yuan, up 86.01 percent year on year.
According to Chen kexin, chief analyst at Lange iron and steel economic research center, the reason why steel companies are actively increasing production lies in the rich profit level of tonnage steel.
According to the latest data from the China iron and steel association, in early November, crude steel output of key steelmakers nationwide averaged 1.916,400 tons per day, up 0.57% from the previous ten days.At the end of early November, the steel inventory of key steel enterprises was 12.2288 million tons, an increase of 0.07% from the end of the previous ten-day.
A person in charge of steel trade enterprise expresses to “daily economy news” reporter, although the north is in heating season executive limit produces, but limit produces and expect, produce steel especially heavy ground, heibei area limits produce blast furnace is not ideal, output does not fall to increase conversely, the market fears tired warehouse transfers to the market from steel mill.
In the fourth week of November, the domestic steel market as a whole into the downward channel.As of November 23, 2018, the composite steel price index was 4.61% lower than the previous week and 9% lower than the same period last month, according to Lange steel network.The index of long steel prices was 6.67 percent lower than the same period last week and 10.25 percent lower than the same period last month.
“When steel prices are low, we hope to see prices return to a reasonable space, but if steel prices rise beyond this level, they also need to return to a reasonable space,” li said of the weeklong decline.
“The ups and downs in market prices are a sign of immaturity.”According to li, although the industry is recovering, steelmakers should keep a clear mind. There are still many problems and challenges in the industry, such as environmental protection, impulse to expand production capacity, high debt ratio, trade environment and downside risks of the macro-economy.
The relocation of urban steel mills should not be “one-size-fits-all”
The Chinese iron and steel enterprise that experiences industry cold winter, come out predicament gradually now.However, li warned that the first challenge facing the steel industry to keep a clear mind on the “good day” is the pressure of environmental protection.
In fact, in the two years of 2016 and 2017, China’s iron and steel industry has withdrawn 120 million tons of capacity, but also banned 140 million tons of “tiantiao steel”, in the process of eliminating excess capacity and banning “tiantiao steel”, a very important standard is environmental protection standards.
A number of iron and steel enterprises in bohai rim region told the daily economic news that with the continuous improvement of the ecological environment requirements, the country’s environmental protection requirements for the development of the whole society are becoming higher and higher, and the environmental protection requirements for the industrial field represented by steel and iron are even higher.
It is also for this reason, iron and steel enterprises retreat relocation cases are common.However, according to li xinchuang, it is short-sighted for iron and steel enterprises in urban areas to move their management in the name of “one-size-fits-all”.
Metallurgical industry planning and research institute information shows that China’s key iron and steel enterprises nearly 70% built in the city, with the “thirteenth five-year” period of steel industry layout adjustment, urban steel mills or will face relocation pressure.
As the first big province of hebei iron and steel, for example, in the steel industry in hebei province to work capacity plan (2018-2020) “mentioned in the” steel capacity in part region, the transfer out, “plan in 2019 ~ 2020, langfang, shijiazhuang, zhangjiakou, three cities by fujian association of foreign languages and transfer and reduce the displacement reduce the steel production capacity of 7 million tons, 5.8 million tons of iron.
Since 2017, some local governments have been pushing for the relocation or closure of steel enterprises in certain regions, and some have even proposed to build “cities/counties/districts without steel”, according to the national business daily.
On the one hand, for some steel mills located in the center of the urban area, the ecological environment and incompatibility with urban development and other constraints are increasingly prominent.In addition, local governments to develop urban steel mill land consideration is also an important factor.
In this regard, li xinchuang said that iron and steel enterprises are heavy assets enterprises, relocation costs, and after the relocation of enterprise production and management pressure will be significantly intensified.For urban steel mills can not simply “one-size-fits-all”, have chosen to move a way out.
“A steel company can be a name card for a city.”According to li xinchuang, iron and steel enterprises themselves are a city. They can develop green, co-develop with the city and make the city better.
Li xinchuang suggested that the development of standard conditions, one enterprise one policy, classification and batch planning of urban steel mills outlet, especially for a certain period of time in advance to achieve ultra-low emission standards of steel mills, should not be limited to move.
Post time: Nov-27-2018