Unswervingly eliminate excess iron and steel production capacity

Meng Wei, a spokesman for the National Development and Reform Commission, pointed out on the 17th that, on the whole, the current iron and steel industry is running smoothly and the utilization rate of production capacity continues to remain within a reasonable range. Next, the NDRC will pay close attention to the overall operation of the iron and steel industry, and will unswervingly implement the tasks of resolving the excess capacity of iron and steel.

The National Development and Reform Commission held a regular thematic press conference in Beijing on the 17th to publish the macroeconomic operation and answer journalists'questions. Some reporters asked that the data released by the National Development and Reform Commission recently showed that steel production reached a new high in the first quarter, but at the same time, the China Iron and Steel Industry Association also pointed out that the benefit of iron and steel enterprises declined significantly in the same period, with the total profit falling by 30.2% year on year. What is the cause of this phenomenon? Does it mean that the excess capacity of iron and steel is reappearing, and what countermeasures do the relevant departments have to deal with it?

Meng Wei pointed out that in the first quarter, the real estate, railway infrastructure and household appliances industries in downstream steel industry all achieved rapid growth, which promoted the growth of steel consumption under the background of overall stable and progressive Chinese economy. In addition, China's steel exports grew by 12.6% year-on-year in the first quarter, which was significantly better than expected. Under the combined action of various factors, the crude steel output in the first quarter of the country was 23.17 million tons, up 9.9% year-on-year, and maintained a relatively rapid growth trend.

According to Meng Wei's analysis, the overall benefit of the iron and steel industry declined in the first quarter due to two factors: the rise of iron ore price and the fall of steel price. For iron ore, import iron ore prices have been rising steadily since the first quarter, especially after the dam break in Brazil's Vale, the price of iron ore has risen sharply through futures and trade market speculation. At the end of January, the price of imported iron ore rose to 81.71 U.S. dollars per ton; in February, the price of imported iron ore once exceeded 90 U.S. dollars per ton; at the end of March, the price of imported iron ore was 84.90 U.S. dollars per ton, up 33.5% year-on-year, although it has fallen, it is still at a high level. In terms of steel prices, after the rapid decline in November 2018, the first quarter of this year began to stabilize and slowly recover. The comprehensive evaluation index of China's steel price index in the first quarter averaged 107.88 points, down 4.43% from the same period last year, which still lagged behind the previous high point.

Meng Wei disclosed that, on the whole, the current operation of the steel industry is relatively stable, and the productivity utilization rate continues to maintain in a reasonable range. Next, the NDRC will pay close attention to the overall operation of the steel industry. On the one hand, we will continue to adhere to the principles of marketization and legalization, unswervingly implement the tasks of resolving the excess capacity of iron and steel, maintain a high pressure situation of zero tolerance for illegal and illegal capacity, and consolidate the achievements of resolving the excess capacity. On the other hand, we will continue to give full play to the role of trade associations, accelerate the innovation and development of the industry, strengthen industry coordination and self-discipline, do a good job in industry monitoring and analysis, and take timely and effective measures to promote the smooth operation of the steel market.