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Cutting Overcapacity Of Steel Overfulfilled The Quota This Year, The Ministry Of Industry And Information Technology Will Introduce New Policy
- Dec 19, 2017 -

In the less than two years, China has reduced its steel production capacity by more than 115 million tons and the upper limitation target of the "13th Five year plan" is 150 million tons. Officials from the Ministry of Industry and Information Technology pointed out: Next year will continue to focus on capacity-building in key areas, strictly control new production capacity and prevent the "substandard steel" from resurging. To increase production capacity more emphasis on the structural adjustment of production capacity, the introduction of steel production capacity will be replaced by the New Deal.

The rapid progress of steel to capacity production, China has completed ahead of schedule this year's goal and task. In less than two years, China has reduced its steel production capacity by more than 115 million tons, at least 76.7% of its five-year target of steel de-capacity. China also cleared 140 million tons of "strip steel" capacity, which brought about an overall turnaround in the steel industry.

End of the year, what should we do about cutting overcapacity of steel ? Officials from the Ministry of Industry and Information Technology pointed out: Next year will continue to focus on capacity-building in key areas, strictly control new production capacity and prevent the "substandard steel" from resurging.

To pay more attention to the production capacity of the structural adjustment of production capacity, the introduction of steel production capacity will be replaced by the New Deal, is conducive to the steel production capacity of geographical distribution structure and process structure to further optimize.

Steel to capacity has exceeded 115 million tons

Recently, Xu Wenli, chief of the steel division of the Ministry of Industry and Information Materials Department of the Ministry of Industry and Information Technology, recently said in the 2017 (sixth) China Steel Raw Materials Market High-end Forum that the target of the government's work report on the cutting overcapacity of steel production in 2017 will be 50 million tons and has now exceeded this target.

China also removed 140 million tons of "substandard steel" capacity. Xu Wenli said that after the implicit output of "substandard steel" was forced out of the market, the market order was effectively improved. The profits of the steel enterprises showed a clear improvement. The profit of large and medium-sized steel companies as counted by the Iron and Steel Association grew by 360%.

With the clearing of "substandard steel" , the price of steel has risen from the initial 1,000 yuan to more than 4,000 yuan, the recent rebar price is approaching 5,000 yuan mark.

Industry concentration is also rising. Last year, the State Council issued the Guiding Opinions on Promoting the Merger and Reorganization of Zombie Enterprises in the Iron and Steel Industry in the Industry. The goal is that by 2025, 60% to 70% of the capacity of China's steel industry will be concentrated in about 10 large groups to form 3 to 4 80-million-tonne steel groups and 6 to 8 40 million tons Grade steel group.

Prevent "substandard steel" resurgence

Li Xinchuang, dean of the Planning and Research Institute of Metallurgical Industry, believes that cutting overcapacity is a systematic and continuous work and will not stop producing capacity due to the recent profitability improvement of steel enterprises. The future of steel to be able to strictly abide by the two bottom lines, one is to strictly control the new capacity, and the other is to completely ban the "substandard steel."

Xu Wenli said that in 2018 to continue to do a good job of steel to capacity. First, we must be precise policy, do a good job in key areas to capacity. At present, some key areas of China's steel to capacity tasks are still heavier, more pressure. Localities should focus on disposing of zombie businesses, removing inefficient capacity and shutting down unplanned production capacity while avoiding the "one size fits all" phenomenon.

 "Substandard steel is a cancer of the industry, its ban hard to come up with the next step from the national level, the substandard steel always keep the outcrop on the high pressure situation .Xu Wenli said.

In addition, Xu Wenli stressed the need to strictly control the new capacity to prevent capacity rebound. Since the beginning of this year, the efficiency of enterprises has risen sharply. The requirements for the resumption of construction of the previously stopped projects have appeared in varying degrees throughout the country, and signs of new production capacity have emerged.

According to the calculation data of Zoomlion, this year's full-scale steel mills re-produced more than 10 million tons, of which long-term discontinued blast furnace volume of more than 8 million tons.

Will announce the production capacity to replace the New Deal

In 2015, the Ministry of Industry and Information Technology promulgated the "Measures for the Replacement of Production Capacity in the Industry with Serious Overcapacity", which is valid till the end of this year.

"The next step is to replace the production capacity? I think the replacement of production capacity must be adhered to, or the next step of the steel industry restructuring, including the relocation and other issues will be difficult to promote the same time, it is also a line of control of new capacity Effective means. "Xu Wenli said, adding that the Ministry of Industry and Information Technology will introduce a new capacity replacement policy.