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Comments on the revitalization plan of the iron and steel industry: Iron and steel will prosper the economy

comments on the revitalization plan of the iron and steel industry: Iron and steel will prosper the economy

China Construction machinery information

Guide: matters: the State Council recently announced the detailed rules of the "iron and steel industry adjustment and revitalization plan". On the whole, the detailed rules provide some more detailed contents, and point out the clear direction in the aspects of steel production and demand balance, elimination of backward production capacity, merger and reorganization, technological progress and tax policy. Of which:


the State Council recently announced the detailed rules of the "steel industry adjustment and revitalization plan". On the whole, the detailed rules provide some more detailed contents, and point out the clear direction in the aspects of steel production and demand balance, elimination of backward production capacity, merger and reorganization, technological progress and tax policy. Among them, mergers and acquisitions, elimination of backward production capacity and export tax policies will be the focus of the revitalization plan


the first revitalization plan officially released by the State Council shows the position of the steel industry in the national economy

the State Council announced the detailed rules of the "steel industry adjustment and revitalization plan" on March 20. This is the first officially announced plan in the ten revitalization plans, which shows that the iron and steel industry plays a decisive role in the national economy. From the relationship between the upstream and downstream industrial chains of the national economy, the iron and steel industry is in a connecting position. It is an important raw material industry for economic development and an industrialized grain. As the saying goes, "before soldiers and horses move, grain and grass go first". In an economic environment like China, Only by giving priority to the development of the steel industry, can the development of other industries have a solid foundation. The development of the iron and steel industry is closely related to the development of China's macro-economy. In a sense, the iron and steel industry is also the leading indicator of the macro-economy, because its downstream faces many fields such as real estate and automobiles, and its upstream is a major consumer of major raw fuels. If the downstream industries cannot ensure stable consumption demand, the rigid supply of the iron and steel industry will be targeted, which in turn will form production pressure on the upstream. Therefore, the strategic significance of the first promulgation of the "steel industry adjustment and revitalization plan" is far greater than the economic significance. The state's 4trillion investment plan to stimulate domestic demand also provides a confidence guarantee for the revitalization of the steel industry. If steel prospers, the economy prospers

overcapacity has seriously troubled the normal operation of the industry, and it will take time to get rid of difficulties

according to the correlation analysis between GDP and steel consumption and the pull of national investment on steel and other factors, we predict that the apparent consumption of crude steel in China in 2009 will be about 445 million tons, a year-on-year decrease of nearly 2.7%. Exports were about 35million tons, a year-on-year decrease of about 24million tons, a decrease of 34%. Considering the domestic demand, import and export situation and the replenishment of dealers' inventory, China's steel output should be about 490 million tons, a year-on-year decrease of 2%. However, at present, the output has still reached a relative high of 520 million tons. Under the situation that the demand is difficult to improve significantly, the industry will face the risk of high inventory again. Overcapacity puts the industry in a dilemma. On the one hand, in order to digest the high priced raw materials in stock in the early stage as soon as possible, under the expectation of a warming macro expectation, enterprises quickly resumed production, making the capacity utilization rate reach about 90%. In January, China's crude steel output increased by 2.4% against the market trend; The social inventory, especially the social inventory of long materials, increased rapidly, and the steel price also rebounded after hitting the bottom in November 2008, with an average rebound of more than 15%; On the other hand, as the downstream demand and the international situation are still deteriorating or the demand is not significantly effective, the excessive output in turn increases the inventory of finished products and suppresses the price of steel, thus making the industry in trouble again. Especially for large and medium-sized state-owned enterprises with large long-term orders of iron ore. After the Spring Festival, the domestic steel obviously has no market, and the rising price has not been effectively supported by downstream demand. It took only three weeks to fall below the lowest price in the 2008 sharp decline, and return to the cost edge again. Under the current situation, overcapacity makes the industry face severe challenges. Although various national policies to stimulate domestic demand are still being introduced in succession, there will still be a time lag, and it will be difficult for magnesium alloy for horse and bicycle to reach 45kg. Such a large rigid capacity will face a continuing low demand. To ensure the revitalization of the steel industry, on the one hand, the industry must call on enterprises to take the overall situation into account, implement production restriction and price protection, and reduce costs; On the one hand, it is hoped that the country will pull the curve for comparison; The investment plan to stimulate domestic demand can be effective as soon as possible. The industry should prepare for the worst

under the current situation that the national economy has not yet warmed up and the global economy is still further deteriorating, the plan further points out that China's crude steel output in 2009 will be 460 million tons, a year-on-year decrease of 8%; Apparent consumption will remain at about 430 million tons, a year-on-year decrease of 5%. By 2011, the output of crude steel was about 500 million tons, the apparent consumption was about 450 million tons, and the proportion of industrial added value in GDP remained at 4%. More pessimistic than our expectations

The plan points out that by the end of 2010, 53.4 million tons of blast furnace capacity of 300 cubic meters and below, and 3.2 million tons of converter and electric furnace capacity of 20 tons and below will be eliminated; By the end of 2011, blast furnaces with a capacity of 400 cubic meters or less, converters with a capacity of 30 tons or less and electric furnaces will be eliminated, and the backward ironmaking capacity of 72 million tons and steelmaking capacity of 25 million tons will be eliminated accordingly. Regions that implement the elimination of backward and build large iron and steel plants and other regions with conditions should raise the standard of eliminating backward production capacity to less than 1000 cubic meters of blast furnace and corresponding steelmaking capacity. However, it is not a day's work to eliminate backwardness. In the context of the current economic crisis, the pressure of social employment and the key support points of local governments for profits and taxes have put great pressure on the elimination of backwardness. Therefore, we need the support of relevant social policies, such as the establishment of social security system. Of course, the key is to see the implementation of the policy. If the elimination policy can be implemented smoothly, China's iron making capacity will be reduced by 125 million tons to about 550 million tons by 2011. At that time, the macro-economy will pick up, domestic and foreign demand will resume, and the steel industry will return to a reasonable and healthy development, which is still worth looking forward to

the integration and merger of the steel industry has a long way to go, and grasp the strategic opportunity of merger and reorganization

in July 2005, China issued the long-awaited "steel industry development policy". The development policy of the iron and steel industry puts forward clear requirements for the joint reorganization of enterprises, supports the development of iron and steel enterprises in the direction of collectivization, and carries out strategic reorganization through strong alliances, mergers and acquisitions, cross shareholdings, etc., so as to reduce the number of iron and steel production enterprises and realize the adjustment, optimization and industrial upgrading of the organizational structure of the iron and steel industry. According to the development policy of China's steel industry, the concentration of the top 10 industries in China's steel industry will need to reach 50% by 2010. 2 ● bond laminates, a subsidiary of LANXESS in brilon, Germany, will expand its production capacity of continuous fiber reinforced thermoplastic composites, which will reach 70% by 2020. In 2008, although the output, profit and other indicators of China's steel industry hit a record high, the industrial concentration is still not high. In 2008, the total crude steel output of China's top nine steel mills with more than 10million tons was 204 million tons, accounting for 40.7% of the total output of the country, which is still far from the development pattern of the global steel industry with a concentration of more than 70%

the "steel industry adjustment and revitalization plan" issued today once again clarifies that the leading role of Baosteel, Anshan Iron and Steel Group, Wuhan Iron and Steel Group and other large groups will be further played to realize the substantive reorganization of the production, supply and marketing, human and financial unified management of Anshan Iron and steel group, Guangdong iron and Steel Group, Guangxi iron and Steel Group, Hebei Iron and Steel Group and Shandong Iron and Steel Group; We will promote the joint reorganization of AnBen group and Panzhihua Iron and Steel Co., Ltd., Northeast Special Steel Co., Ltd., Baosteel and Baotou Iron and Steel Co., Ltd., Ningbo iron and Steel Co., Ltd., and Tianjin steel pipe and Tiantie, Tiangang, Tianjin Metallurgical Company, TISCO and iron and steel enterprises in the Province. Strive to form several super large iron and steel groups with more than 50million tons and international competitiveness, such as Baosteel Group, AnBen group and WISCO group, by 2011; Several large iron and steel groups of 10million ~ 30million tons. The production capacity of the top five steel groups in China has reached more than 45% of the national total. The production capacity of coastal and riverside steel enterprises accounts for more than 40% of the national production capacity

low concentration restricts the development of China's iron and steel industry, leading to excessive investment, repeated construction, overcapacity, which is not conducive to the effective use of resources and the standardization of market order, resulting in sharp price fluctuations. In the face of strong international competitors, they do not have sufficient strength to compete in the product market and capital market

in the iron ore negotiations, China's steel industry has been suffering from the decentralization of voice. However, with the promulgation and implementation of the steel industry adjustment and revitalization plan, China's steel industry will accelerate the process of mergers and acquisitions. The development history of the world steel industry shows that the only way for the steel industry to mature is to moderately improve the industrial concentration through mergers and acquisitions among enterprises. In order to improve its competitiveness and achieve sustainable development, China's iron and steel industry must take the road of joint reorganization, through the merger and reorganization of advantageous enterprises and the survival of the fittest, in order to fundamentally realize the transformation of China from a large iron and steel country to a powerful iron and steel country. However, at present, as China's market economy has just begun, the segmented management mode formed by the planned economy in the past has formed the biggest obstacle to market-oriented mergers and acquisitions. The ownership of profits and taxes, personnel placement and corporate culture are all problems that the integration of the steel industry must face and solve

in particular, more than 70% of the assets of China's steel industry are state-owned assets, and its management and operation mode is far from market-oriented operation due to its relative monopoly position in various regions. Although at the enterprise level, the awareness of integration through capital ties has been greatly enhanced, and all regions or enterprises have expectations of future acquisitions or acquisitions, without the promotion of the government, it is quite difficult to integrate mergers and acquisitions, In terms of cross regional mergers and acquisitions, generally, we can only stay in the technical cooperation or coordination of raw material procurement at the strategic level where the Fed's quantitative easing exit is on the agenda. The real progress of capital mergers and acquisitions is slow. In recent years, the government led regional mergers and acquisitions have gradually increased, such as the saddle merger, Hebei Iron and Steel Group and Shandong Iron and Steel Group, which are all local mergers and acquisitions, but the asset integration driven by marketization is far from beginning, At present, local protection, social pressure, and even conservative forces constitute obstacles to cross provincial mergers and acquisitions among major regions in China. At this stage, cross regional mergers and acquisitions of iron and steel enterprises are limited to simple strategic alliances aimed at obtaining stronger bargaining power in raw material procurement and product sales. However, this loose strategic alliance has little effect on optimizing the industrial structure and improving the concentration. However, the overcapacity and decline in economic benefits brought about by the economic crisis, and the whole industry is facing losses or meager profits, which have once again provided objective external conditions for market-oriented mergers and acquisitions

Not long ago, Baosteel Group acquired Ningbo iron and steel, which is another major cross regional industrial restructuring after the restructuring of Xinjiang No.8 steel and Guangzhou steel

Baosteel is also expected to achieve a breakthrough in crude steel production capacity of 40million tons this year. At this point, Baosteel once again occupied the first place in the domestic steel output. Moreover, the market pattern radiating the south, East and northwest has been formed strategically

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