In the first half of the year, the steel industry was running steadily.

In the first half of this year, the steel industry achieved results in resolving excess capacity, and corporate profits rebounded significantly. China Steel Association believes that the steel industry will continue to exert capacity and de-leverage in the second half of the year to improve corporate profit levels and lay a foundation for the healthy development of the industry. The six executive directors of the 5th China Iron and Steel Industry Association held on July 28 (expanded) The meeting sent out information. In the first half of this year, the steel industry solved the staged results of overcapacity. The operating environment of the industry improved initially, and the profitability of the company was better than expected. However, the foundation of the whole industry is still not solid. In the second half of the year, we must seize the rare opportunity, continue to fight for capacity, leverage and fight hard, accelerate the pace of transformation and upgrading, and lay a solid foundation for the sustained and healthy development of the steel industry.
The operation to improve the efficiency of the steel industry to achieve excess capacity has achieved tangible results, promoted the improvement of industry benefits, increased capacity utilization, market expectations significantly improved with the solid advancement of supply-side structural reforms, supply and demand in the steel market in the first half of the year The situation tends to improve, steel production is growing, steel prices are picking up, most companies' profits are significantly improved, and industry operations are showing a steady and good situation.
Crude steel production remains at a high level. The latest data shows that the country's crude steel output in the first half of the year was 420 million tons, an increase of 4.6%. From January to June, the national average daily production of crude steel was 2,319,100 tons, of which the daily production of crude steel reached 2,441,100 tons, a record high.
Steel prices fluctuated upward. At the end of June, the CSPI domestic steel comprehensive price index was 101.03 points, up 48.95% year-on-year. From the average level, from January to June, the comprehensive steel price index was 100.14 points, up 46.92% year-on-year, of which the long product price index rose by 54.23% year-on-year, and the sheet price index rose by 39.98%.
The benefits have improved significantly. In the first half of the year, the total profit of steel and steel enterprises of China Steel Association was 53.242 billion yuan, an increase of 41.844 billion yuan over the same period of the previous year, a year-on-year increase of 367.12%. In terms of total profit composition, the profit from the main business in the first half of the year was 42.819 billion yuan, a year-on-year increase of 746.23%, and the profit structure has been significantly improved. From the performance of enterprises, not only the profits of some leading steel enterprises such as Baowu and Shagang have increased significantly, but even Pangang, Ba Steel and Handan Iron and Steel, which have difficulties in operating, have turned losses into profits.
The chairman of China Iron and Steel Association, Wei Wei, said that the operation of the steel industry in the first half of the year was stable and stable. It was not only the result of hard work in the whole industry, but also benefited from the in-depth advancement of the work of resolving excess steel capacity, especially the ban on “strip steel”. Highlighting the results and changing the market environment of “bad money drives out good money”.
This year is the year of going to work. After hard work, as of the end of May this year, the country has solved the iron and steel excess capacity of 42.39 million tons and completed 84.8% of the annual capacity-removal task. In the first half of the year, China has banned and shut down more than 600 “strip steel” production enterprises, involving production capacity. 120 million tons. The special supervision shows that the “strip steel” enterprises within the scope of supervision in various places have basically been in a state of suspension of production, and most “strip steel” enterprises have been dismantled in accordance with the requirements of “four thorough”.
This year, members of the China Steel Association, which has the task of de-capacity, continue to reduce production capacity, and do a good job of diversion and resettlement of workers, and set an example in steel production capacity. Baowu plans to reduce its production capacity by 5.45 million tons this year, of which 3 million tons have been sealed. The work of Hegang's reduction of ironmaking capacity of 1.04 million tons and steelmaking capacity of 3.36 million tons is progressing steadily. Jiugang eliminated 1.7 million tons of production capacity. On the basis of reducing the production capacity of 2.2 million tons and resetting 3,580 people last year, Tiangang has placed 1,840 workers this year.
“The steel industry has achieved tangible results in resolving excess capacity, which has promoted the improvement of industry efficiency and capacity utilization, and the market expectation has improved significantly.” Xia Nong, inspector of the Industry Coordination Department of the National Development and Reform Commission, said that according to the established goals, China should use Five years to resolve the excess capacity of steel from 100 million tons to 150 million tons. Last year, the excess capacity of steel was over 65 million tons, and this year it will be further reduced by 50 million tons. This means that China will spend more than 100 million tons of excess steel production capacity in two years and enter the five-year target range.
Profitability is still low The current steel price level is only roughly the same as the 1994 level. The average profit per ton of steel of member companies is only about 160 yuan, and some enterprises are still losing money. As the industry booms, the steel industry's production boom in the first half of the year, and the price increase and increase have caused social concern. "Ten steel profits exceed 1,000 yuan" Being fired. Regarding the operation of the steel industry in the first half of the year, the person in charge of the China Iron and Steel Association made an in-depth analysis.
Wei Wei said that the crude steel output increased by 4.6% in the first half of the year, which was the growth after the elimination of “strip steel”. The actual significance is different from the previous growth, which is a reflection of market demand. In the first half of the year, members of the China Iron and Steel Association produced 324 million tons of crude steel, up 6.8% year-on-year, while non-member companies produced 2.11% of crude steel, fully demonstrating that capacity reduction has promoted the further development of advanced production capacity.
“The rise in steel prices is a rational recovery.” Wei Wei said that from 2011 to the end of 2015, the domestic market steel prices experienced a continuous decline of 50 months, and the lowest comprehensive steel price index was only 54.48 points, only equivalent to 1994. At about half of the price of steel in April, steel prices began to rise from January last year. At the end of June this year, the comprehensive steel price index was 101.03 points, up 1.53% from the end of last year. At the same time, the prices of bulk raw fuel products have also shown an upward trend since last year.
In fact, the current steel price level is basically the same as the 1994 level, and the task of achieving continuous improvement in the steel industry is still arduous. In the first half of the year, the sales profit rate of member companies was only 3.04%, which was much lower than the average of 6.11% of the profit rate of the main business of industrial enterprises above designated size in the first six months. The average profit per ton of steel for member companies is only about 160 yuan, some companies are on the verge of profit and loss, and some companies are still losing money.
Strictly guarding against the resurgence of “strip steel” “strip steel” is a stubborn disease in the steel industry, and its production is driven by strong interests. Thoroughly removing the "strip steel" directly related to the transformation and upgrading of the industry can be done well. The fundamentals of oversupply of steel have not been fundamentally changed. The prominent contradictions and problems that have affected the development of the industry and enterprises for a long time and uncertain factors still exist. At present, the foundation of the whole industry is still not strong. Participants believe that it will still take painstaking efforts to do a good job in the second half of the year.
On the basis of the phased results of resolving the excess capacity in the first half of the year, the second half of the year will enter the final stage of completing the annual task and clearing the inspection and acceptance stage of the “strip steel”.
“Blowing the 'strip steel' is the 'seven inches' of the steel industry's de-capacity. It must unswervingly eliminate the 'strip steel'.” Liu Zhenjiang, secretary of the party committee and secretary of the China Iron and Steel Association, said that the “strip steel” was completely removed. Whether the foundation of the transformation and upgrading of the relationship industry can be done well, the basic work cannot be sloppy.
“Strip Steel” is a stubborn disease in the steel industry, and its production is driven by strong interests. In the inspection of the fourth inspection of the State Council by the State Council, it has been found that there are still some enterprises in Tianjin, Hunan and other places that have the problem of illegal production of “strip steel”. Recently, Premier Li Keqiang of the State Council made important instructions to ban the "strip steel" and resolve the excess capacity to be unswervingly promoted to prevent a resurgence. Those who commit crimes against the wind must be resolutely punished according to law, and they must be strictly accountable for weak supervision, and must be prohibited.
In order to ensure that the target of overcapacity is resolved and the “strip steel” is completely banned, the relevant inter-ministerial joint meeting will organize special inspections of “strip steel” and special inspection and spot check and acceptance work in 2017. The relevant departments will establish a long-term mechanism and persist in unremitting efforts to prevent the resurgence of “strip steel”.
Reducing the leverage of steel companies is also a key focus of the industry. In accordance with the relevant objectives, we strive to reduce the industry's average debt-to-asset ratio to less than 60% after three to five years of efforts. As of the end of June this year, the average asset-liability ratio of large and medium-sized steel companies was 70%. At present, 10 steel companies have signed debt-to-equity swaps with banking institutions; the first batch of “de-leverage” typical companies has also been confirmed.
“In the first half of the year, the de-leveraging effect of the steel industry was not outstanding, and it is necessary to further accelerate the pace.” Wei Wei said that the effect of de-leveraging is tested. First, it depends on whether the company’s asset-liability ratio has not fallen, and whether the corporate financing environment has improved. It depends on whether the financial cost of the enterprise has dropped or not, and whether the financial burden has dropped. China Steel Association will continue to strengthen communication with financial management departments and financial institutions, strive for further support, and promote relevant policies to land as soon as possible.
It is reported that China Steel Association has submitted special reports to the inter-ministerial joint meeting and relevant ministries on issues such as “fundamental real debt”, debt disposal and loan structure that are reflected in the process of de-capacity. The proposal for debt disposal in de-capacity has received the attention of relevant departments and is currently collecting typical cases.
Improving the quality and efficiency of economic operations is the constant theme of the development of the steel industry. In the case of rapid release of production capacity and increased risk of steel price fluctuations, it is necessary for the steel industry to strengthen self-discipline and ensure smooth operation. The China Iron and Steel Association stresses that enterprises must achieve productive production, avoid imbalance between supply and demand, and prevent vicious competition. At the same time, we must actively promote the transformation and upgrading of the industry. Vigorously improve the stability, reliability and durability of steel product quality; focus on promoting the development, promotion and application of high-end steel products required for advanced rail transit, aerospace, nuclear power, etc.; actively promote service-oriented manufacturing and adhere to green development. Wei Wei proposed that the quality and service advantages should be used to hedge the rising costs and form a new competitive advantage for steel companies.