Continue to promote the high-quality development of the steel industry
According to data from the National Bureau of Statistics, from January to September 2021, the national output of pig iron, crude steel, and steel was 671 million tons, 806 million tons, and 1.02 million tons, respectively, representing a year-on-year decrease of 1.3%, an increase of 2.0%, and an increase of 4.6%. They were 5.1, 2.5 and 1.0 percentage points lower than the same period last year.
How did the Chinese steel companies benefit in the first three quarters? Under the premise of “dual control” of production capacity and output, how to implement the policy of output reduction in a fair and reasonable manner so as to achieve “cutting production without reducing efficiency”? How to maintain the smooth operation of the steel industry? Faced with the above questions, the reporter found the answers to the relevant questions at the third quarter information conference of the China Iron and Steel Industry Association held on October 25.
Due to strong international market demand and rising commodity prices, steel import and export prices have also risen sharply. Data show that from January to September, steel exports rose by 35.6% year-on-year; the average import price rose by 55.4% year-on-year. At the same time, the prices of main raw materials for steel production have also risen sharply. From January to September, the average price of imported fine ore was US$171.67/ton, an increase of 72.64% year-on-year, the price of coking coal increased by 57.07% year-on-year, the price of coke increased 56.88% year-on-year, and the price of scrap steel increased 36.48% year-on-year.
“Since the beginning of this year, on the basis of strict control of new production capacity and strengthening of total energy control, the state has formulated an industrial policy for the annual crude steel output not to be higher than last year and restricting the export of large quantities of steel. Especially since August, Relevant provinces and cities have introduced a new round of energy regulatory measures, coupled with the tight supply of coal and electricity, the pressure on the production and operation of iron and steel enterprises has further increased.”
It is worth mentioning that the level of energy conservation and environmental protection in the iron and steel industry has continued to improve. From January to September, the comprehensive energy consumption per ton of steel per ton of steel enterprises of the China Iron and Steel Association was 555.33 kg of standard coal/ton, a year-on-year decrease of 1.46%; the consumption of fresh water per ton of steel dropped by 2.32 %; chemical oxygen demand decreased by 8.20%; sulfur dioxide emissions decreased by 18.68%. “At the same time, it is necessary for steel companies to continuously improve the dynamic adaptability of domestic steel product supply and demand, and continue to focus on the fundamental task of comprehensively improving the industrial foundation and industrial chain level.”
Continue to do a good job of “dual control” of production capacity
In the face of environmental and resource constraints, how should we implement a fair and reasonable output reduction policy, so as to achieve “cutting production without reducing efficiency”? Shi Hongwei, deputy secretary-general of the China Iron and Steel Association, said that at present, the direction of the iron and steel industry policy is correct, and the actual effect is also good. Two premises: First, the demand for steel products lacks price elasticity, that is, the demand is rigid, and price increases and price reductions have little impact on consumption; second, the supply elasticity of steel products is very large. Calculated on the basis of 3.26 million tons of steel produced per day in April, the annual chemical steel output was 1.19 billion tons; on the basis of the daily steel output of approximately 2.46 million tons in September, the annual chemical steel output was 900 million tons, a difference of nearly 300 million tons. Under these two premises, in order to achieve the adaptation of supply and demand and build a new pattern of “demand leads supply, supply creates new demand”, the steel industry has implemented “dual control” this year.
As far as “reducing production without reducing efficiency”, the key is still to adapt supply and demand, especially dynamic adaptability, in order to maintain stable steel prices and keep corporate profits stable.
The data shows that the national production restriction policy has a significant effect. From January to September this year, the increase in crude steel output dropped by 2.5 percentage points from the same period last year, while steel exports increased by 31.3%. Production growth is declining while exports are increasing. Is there a shortage of domestic steel demand? In terms of steel prices, the average daily output of crude steel in April reached about 3.26 million tons, which had dropped to nearly 2.46 million tons in September. While output has fallen, demand has also fallen, and supply and demand are commensurate. Especially with the advancement and implementation of the state’s work to ensure supply and price stabilization, coal and coke prices have also begun to decline. It can be seen that the state’s policy regulation is in place, and it plays a very important role in maintaining the healthy development of the industrial chain and supply chain. The supply and demand of steel will basically maintain a dynamic balance, and there will be no major fluctuations.
Take multiple measures to maintain the smooth operation of the steel industry
Currently, resource and energy prices have risen sharply, making it more difficult for companies to reduce costs and increase efficiency. Since the second half of the year, under the influence of various measures, the price of iron ore has fallen sharply, currently fluctuating around US$120/ton, but still at a high level. At the same time, the supply-demand relationship between coal and coke is tight, and prices have risen sharply and rapidly. Especially since September, due to the tight power supply, steel companies have cut production and stopped production more, and corporate costs will increase significantly. The pressure of rising costs will be difficult to change in the short term, and the profitability of steel companies is facing a downward trend.
In the next stage, the steel industry will focus on five aspects:
The first is to continue to promote supply-side structural reforms, maintain the stable operation of the industry, further strengthen industry self-discipline, and focus on promoting various tasks such as “cost reduction, risk prevention, quality improvement, and efficiency stabilization”, and strive to promote the smooth operation of the industry.
The second is to strengthen the construction of the industrial chain and supply chain, and promote the coordinated development of upstream and downstream. Strengthen system construction and communication, strive to maintain the stability of the supply chain of the industrial chain, and speed up the resolution of iron ore security related issues in terms of increasing the supply of iron, improving the pricing mechanism, and improving the rules of the futures market. At the same time, strengthen communication and cooperation with downstream industries such as real estate, machinery, automobiles, shipbuilding, and chemicals to jointly build a harmonious industrial chain and enhance the industry’s ability to resist risks.
The third is to adhere to the green and low-carbon direction and increase scientific and technological innovation. Continue to advance the transformation of ultra-low emissions in an orderly manner, conduct scientific, standardized and reasonable evaluation, monitoring and publicity work, and accelerate the realization of ultra-low emissions. Strengthen cooperation between the upstream and downstream of the industrial chain, promote green design products, promote green consumption, and jointly plan the low-carbon transformation of steel.
The fourth is to benchmark international first-class standards and carry out in-depth benchmarking to tap the potential. Faced with the high prices of raw materials and the continuous increase in green and low-carbon investment, steel companies must benchmark against advanced domestic and foreign companies, carry out in-depth benchmarking and find gaps, brave the old and bring forth the new, keep pace with the times, and stand higher. Plan the layout from the perspective of the company, further improve competitiveness, and improve the quality and efficiency of enterprise operations.
The fifth is to accelerate digital construction and promote the development of intelligent manufacturing in the industry. Promote the application of 5G, big data, industrial Internet, artificial intelligence, blockchain and other technologies in the steel industry, accelerate the deep integration of innovation and intelligence in steel research and development, manufacturing, operation, management and service models, and break through a number of key common technologies for smart manufacturing , To build a batch of smart factories with self-perception, self-learning, self-decision-making, and self-execution capabilities.