In view of the current weak demand in the steel market and declining profits, China Baowu Taigang group has increased its efforts to reduce costs and improve efficiency, actively build product differentiation competitive advantages, and promote new product R & D and innovation.
In the first half of 2022, the steel industry will face a severe and complex market environment. In particular, since the second quarter, the overall demand for steel has been weak, the raw fuel price has been running at a high level, the steel price has dropped sharply, and the economic benefits of enterprises have declined.
Under such special circumstances, the iron and steel industry adheres to the principle of "stability first, seeking progress while maintaining stability", maintains a stable operation situation, increases reform and innovation, and strives to improve the quality of development. "We have confidence, confidence and ability to cope with all kinds of difficult challenges and consolidate and improve the overall situation of the iron and steel industry." Zhang Haideng, deputy director of the raw material industry department of the Ministry of industry and information technology, said.
The contradiction between supply and demand is prominent
From January to June this year, the output of pig iron and crude steel in China was 439 million tons and 527 million tons, respectively, down 4.7% and 6.5% year on year. Despite the year-on-year decline in steel production, the contradiction between supply and demand in the market is still prominent.
From the demand side of steel, due to the outbreak of epidemic in many places in China in the second quarter, the development of national economy was greatly affected, and the supply chain of steel industry chain was greatly affected. Many indicators of the downstream main steel industry were negative year-on-year growth, and the steel market demand was lower than expected. The mismatch between supply and demand in the market led to a high level of steel stocks. In late June, the steel inventory of key member enterprises of CISA was 16.95 million tons, an increase of 50% over the beginning of this year and a year-on-year increase of 23.1%; The social inventory of five types of steel in 21 cities monitored by CISA was 12.52 million tons, up 58.9% from the beginning of this year and 9.3% year-on-year.
The steel price showed a trend of rising and falling. In the first half of the year, the average value of China steel price index (CSPI) was 133.92 points, a year-on-year decrease of 2.85%. According to the monthly situation, the first four months increased month by month, and the steel price continued to decline in May and June. At the same time, the cost of raw materials continues to be high. In the first half of the year, the cost of iron ore procurement decreased, and the cost of coal and coke increased significantly. The average price of coking coal was 2956 yuan / ton, up 68.2% year on year; The average price of coke was 3099 yuan / ton, up 28.53% year on year.
Affected by the rise in production costs and the decline in sales prices, the benefits of iron and steel enterprises declined year on year. In the first half of the year, the iron and steel enterprises of China Steel Association realized an operating income of 3339 billion yuan, a year-on-year decrease of 4.65%; The operating cost was 3071 billion yuan, a year-on-year decrease of 0.18%, and the decrease in cost was 4.47 percentage points less than the decrease in operating revenue; The total profit was 103.4 billion yuan, a year-on-year decrease of 55.47%; The average sales profit rate was 3.10%, a year-on-year decrease of 3.53 percentage points. In the second quarter, the profits of member steel enterprises fell month on month for three consecutive months.
Under the increasing downward pressure, the overall asset status of the iron and steel industry is still at a historically good level, the asset liability ratio of enterprises has decreased year on year, and the debt structure has been continuously optimized. At the end of June, the asset liability ratio of steel enterprises of China Steel Association was 60.87%, a year-on-year decrease of 0.8 percentage points; The long-term bank borrowings of steel enterprises of China Steel Association increased by 8.24% year on year, and the short-term borrowings decreased by 9.02% year on year.
Looking forward to the second half of the year, steel demand is expected to rebound. "Although there will be no significant increase in steel consumption in the third quarter, it will show a trend of gradual improvement on the basis of the second quarter." He Wenbo, executive chairman of China Steel Association, said that the effect of infrastructure investment will be clearly reflected in the third quarter. The overall state of the real estate industry tends to be stable, the shipbuilding industry has sufficient orders, and the production and sales of the automobile industry are picking up.
Reduce output and strengthen self-discipline
At present, there are phased difficulties in the production and operation of the iron and steel industry, and the losses of enterprises are gradually expanding. Many enterprises have started to start the business model of emergency response. At the fourth meeting of the Sixth General Meeting of China Steel Association held recently, Zhang Haideng reminded that enterprises in the whole industry should recognize the situation, strive to overcome difficulties, focus on the supply side, adapt to the changes in the current demand situation, restore the dynamic balance of supply and demand, stabilize reasonable prices, prevent big ups and downs, and improve development efficiency.
The industry generally believes that although the main problem in the current market lies in the steel demand side, the solution lies in the steel supply side. Xia Nong, a first-class inspector of the industrial department of the national development and Reform Commission, stressed that it is necessary to consistently deepen the supply side structural reform of the iron and steel industry, resolutely implement various policies and measures of the industry, strictly prohibit the increase of iron and steel production capacity, and consolidate and enhance the achievements of eliminating production capacity.
It is reported that relevant state departments will continue to reduce crude steel output this year. During the reduction of crude steel output, relevant laws and regulations on environmental protection, energy consumption, safety and land use shall be strictly implemented; Adhere to the principle of distinguishing the situation, maintain the pressure, and focus on reducing the output of crude steel in key areas for air pollution prevention and control, so as to avoid "one size fits all"; We should grasp the strength and rhythm, ensure the domestic market demand, and maintain the stable operation of the steel market.
In the first half of this year, the output of crude steel and steel products of Angang was higher than the industry average, and the profit was lower than the industry average. The enterprise realized stable development. Dai Zhihao, general manager and Deputy Secretary of the Party committee of Angang Group, proposed that the overall production limit planning and policy implementation of different regions and enterprises should be reasonably formulated to promote the digestion of overcapacity in an orderly manner and avoid big ups and downs. At the same time, it is suggested to coordinate all steel enterprises to fully implement the Convention on self discipline of steel enterprises to jointly maintain the order of the steel market, strengthen expectation guidance and regional self-discipline, and jointly maintain market stability.
CISA made it clear that in the second half of the year, the iron and steel industry should continue to do a good job in "double control" of production capacity and output, strengthen industry self-discipline, and reasonably arrange production plans according to market needs. "All enterprises should adhere to organizing production according to the actual demand, do not produce without orders, do not sell below cost, do not pay and do not deliver goods, oppose blind production in disregard of demand changes, oppose unfair competition, vicious competition and other behaviors that damage the normal market order of the industry, and strive to promote the stable operation of the industry on the basis of ensuring supply and stable prices." He Wenbo stressed that it is necessary to give full play to the leading role of the leading enterprises in the regional and variety markets, and continue to explore the formation of a new mechanism based on marketization and rule of law, which not only has energy consumption and carbon emission policy constraints, but also has self-discipline of enterprise behavior and effective supervision by the government.
Chen Shaohui, executive director and executive vice president of the board of directors of Jiangsu Shagang Group, said that Shagang will actively respond to the industry self-discipline initiative, pay close attention to market changes, do a good job in analysis, research and judgment, adhere to the principle of "more profitable varieties, control production of varieties with marginal benefits, and no production of products without marginal benefits", and ensure that resources are inclined to high-efficiency varieties.
Turn danger into opportunity and accelerate butterfly transformation
At present, China's steel demand has changed from "yes" to "no". Although the market situation is changeable, the general trend of the gradual decline of the total demand for steel is certain. In this context, the market will accelerate the survival of the fittest, and high-quality development will become the key to turning the crisis into opportunity for the steel industry.
"Since 2016, the iron and steel industry has been in a period of overall development and prosperity. While laying a solid foundation for the development of the industry, it has also covered up some problems in the development." Zhang Haideng pointed out that the key to coping with the severe situation of the current industrial development is to improve the quality of development, effectively change the concept of development, and work hard from the aspects of strengthening innovation ability, intelligent digital transformation, green and low-carbon development, so as to obtain benefits from the quality of development.
"We should keep our eyes inward and practice our internal skills hard." Zhu Guosen, Secretary of the Party committee and the first vice president of Shougang Technology Research Institute, said that Shougang will make good preparations for "hard days, difficult days and tight days", adhere to relying on technological innovation, continue to create five advantages of "products, quality, technology, service and cost", and promote technology to become the core competitiveness.
In the face of fierce competition, Baosteel insists on adopting differentiation strategy to win the market initiative. Its differentiated products such as automobile plate, oriented silicon steel and non oriented silicon steel for new energy vehicles have performed well and maintained strong and stable profitability in the market fluctuations since the second quarter. In the first half of this year, Baosteel's sales volume of differentiated products accounted for 53.3%, and the profit contributed was as high as 76%. Hu Hong, member of the Standing Committee of the Party committee and deputy general manager of Baosteel Corporation, said that Baosteel Corporation is confident of winning the market and ensuring that its first position in the industry will not be shaken.
The transformation of China's steel industry from big to strong requires overall planning and long-term efforts. "To continuously promote the high-quality development of the industry, we should not only control the pace in the short term, but also adjust the structure in the medium term and change the pattern in the long term." Said fan Tiejun, President of metallurgical industry planning and Research Institute.
Structural adjustment is an important embodiment of high-quality development of hard power, and also an inevitable way for excellent and strong enterprises to further expand their development advantages and enhance their core competitiveness. Specific measures include adhering to the market orientation, continuously optimizing the product structure, enhancing the supply capacity of high-end products, and constantly improving the stability, consistency and reliability of product quality with large quantity and wide range, as well as the adaptability of product supply and demand. Promote the upgrading of process equipment, accelerate the transformation of restricted equipment, and improve the development level of high efficiency, intelligence and green in the whole process of iron and steel production. We will do a good job in energy-saving management throughout the process, give prominence to the guidance of energy efficiency standards, promote the transformation of ultra-low emissions with high standards, and do a good job in carbon reduction with high quality. We will accelerate the construction of a green industrial chain and supply chain, strengthen the research and development and production of green low-carbon steel products, and promote the continuous increase in the proportion of green steel consumption.
The large number of enterprises and low industrial concentration have led to the iron and steel industry in China having no voice in purchasing raw materials and disordered competition in the domestic steel market, which is a major pain point restricting the high-quality development of the industry. Fan Tiejun believes that in the long run, the development direction of the iron and steel industry pattern must be to form a number of world-class super large iron and steel enterprise groups, to form professional pilot enterprises in the fields of stainless steel, special steel and seamless steel pipes, and to form regional advantageous enterprises through regional restructuring in areas where iron and steel enterprises are concentrated. Iron and steel enterprises should fully understand this development trend, make preparations for response, and actively plan reorganization and integration.
"Under the market downturn, enterprises may have difficulties in operation, but as far as the industry is concerned, it may promote the improvement and promotion of the efficiency of production and operation resource allocation, and create conditions for optimizing the use of land, production capacity, energy and other essential resources through property rights transactions and asset restructuring." He Wenbo said that the downturn in the industry in 2015 brought about the birth of Baowu. The downturn in the industry in 2022 will also bring a new round of industrial mergers and acquisitions, and the industrial concentration of the steel industry is expected to increase rapidly.
