Analysis of Innovation and Transformation of Steel City in the Second Half of the Year

The difficulties and pressures faced by the steel industry in recent years are unprecedented. Market competition is the survival of the fittest. This is an objective law that does not shift with the will of the people. The transformation and upgrading of innovative thinking is the only choice for sustainable development of enterprises. It is expected that the steel prices in the second half of the year will continue to fluctuate. Because the oversupply of steel production capacity leads to a situation in which the oversupply of steel products will continue to exist, major steel companies will not be able to see a large rebound in steel prices if they do not actually reduce production and limit production under high-capacity conditions. "Destocking" takes at least two or three months, and the cycle of "de-capacity" in the entire industry is undoubtedly longer and the situation is more complicated. Therefore, in the short term, the possibility of an improvement in the production and operation situation of iron and steel enterprises will be very small and will even become more severe.

In the first half of this year, the national steel industry presented the new characteristics of “three highs and one low”. “Three highs” means high production capacity, high inventory of steel plants, and high social steel inventory. All three indicators exceeded the highest point in the historical period; “a low”. That is, the benefits of the steel mills are low. According to statistics from the China Iron and Steel Association, more than 42% of the companies suffered losses in the first half of this year. Luo Baihui, chief analyst of Jinmo Iron and Steel Network believes that as the “decapacitation” of steel is a complicated system project, the steel market will continue to operate in the second half of this year. The production and operation of the steel industry will be more and more difficult. There will be no obvious improvement in 5 years or even longer. Analyzing the macroeconomic trends, the situation in the steel industry in 2013 is hardly better than in 2012. The main reasons are reflected in three aspects: First, the country no longer relies on investment to stimulate economic growth and implement a sound fiscal policy. In the coming period, mainly relying on consumption to promote national economic growth, real estate will continue to be regulated, and urbanization construction will advance steadily and in an orderly manner. Investment in transportation and people's livelihood projects will be basically the same as last year. Shipbuilding and major equipment manufacturing are still in a relatively weak state. Demand for steel products There will not be much improvement. Second, China has moved from a period of high-speed growth to a period of low- and medium-low growth. This objective fact cannot be broken. China's economic development will shift from heavy speed to heavy quality. Even though GDP grew by 8% in 2013, the increase in steel production was estimated to be around 3%. The third is the slow recovery of the world economy and the increase in trade frictions. Therefore, in the second half of the year, the difficulty of exporting steel products will be greater than the same period of last year.

The most pressing task is to effectively regulate production capacity, reduce social inventories, and maintain the price of steel that is cost-effective. The problem of eliminating backward production and compressing production capacity has been known for many years, but it cannot always be solved and the situation is very complicated. Unlike other industries, iron and steel is not easy to shut down after the start of the furnace. At present, there have been losses in start-up production and loss in shutdown. Jinmo Steel believes that production will be reduced only when the severity of the shutdown losses is less than the start of production. Everyone does not reduce production and how to digest the stocks? To solve the problem of limited production and pressure storage, enterprises should be considered as "benefit" and "stop" between the benefits. Of course, the introduction of a new policy orientation by the government departments will play a more important role in the optimization and reorganization of the steel industry and sustainable development.

In recent years, the more the steel industry has been eliminated, the greater the production capacity becomes and the lower the degree of concentration is. This is due to both historical reasons and local protectionism. It is a problem that is caused by the intricacies of convergence. “In the steel market downturn, the current steel companies should be the best integration period, but it is obviously difficult to achieve 10% of the iron and steel companies to close through administrative orders, mainly due to the lack of exit mechanisms and supporting policies.” Luo Baihui pointed out that the year There is a clear policy for the integration of European steel companies. There are exit quota systems, a series of preferential policies for the replacement of enterprises and the placement of workers. However, Chinese iron and steel companies have to go through acquisitions and restructuring and then eliminate backward production capacity according to market needs. They all need to pay a huge cost and are also facing the risk of increasing losses. It is suggested that the government should research and formulate practical supporting policies on fiscal subsidy and other policies. Because at present, domestic iron and steel enterprises are large and small, they are legitimate companies that have already registered with industry and commerce, taxation, and business licenses. It is difficult to implement them because they say that production is not even shut down. Of course, we should adopt a more rigorous pushback mechanism in the industry access, so that outdated production capacity gradually withdraw from the market, for the blindly new and repeated construction of steel projects related departments must strictly control checks.

In response to the severe market situation, Shagang will mainly adopt the following countermeasures: First, focusing on improving efficiency and efficiency, sticking to the implementation of low-cost development strategy, carefully organizing steel production, optimizing the quality of varieties, raising the level of indicators, deepening energy conservation, and reducing consumption. This efficiency increase. Second, build a large steel logistics center around the iron and steel industry. We will give full play to the unique advantages of Shagang's brand and location logistics, as well as the surrounding developed industries such as shipbuilding and machinery, and build the Qianlong Steel Logistics Park into an important platform for Shagang to develop a modern service industry. Third, to further expand the rate of return on capital over the steel industry's non-steel industry, and strive to increase the profitability of non-steel Shagang's non-steel industry by more than 30% after 35 years, injecting new impetus into accelerating the transformation and upgrading of enterprises.