Accelerate Merger and Reorganization to Build World-class Iron and Steel

Iron and steel is called the grain of industry. In 1949, China's iron and steel output was only 158,000 tons, less than one thousandth of the world's total annual iron and steel output at that time. There was hardly a complete iron and steel joint venture in China. By 1996, it took only 47 years for China to become the world's largest steel producer. Since then, China has been the world's top producer and consumer of steel for 23 consecutive years, accounting for half of the world's steel production. Recently, a reporter from China Securities Journal interviewed Li Xinchuang, Vice President of China Iron and Steel Industry Association and Dean of Planning Research Institute of Metallurgical Industry. He said that after 70 years of development, China's iron and steel industry has been in the world's first-class square, and has made outstanding contributions to national construction. Under the leadership of the Party and through the efforts of generations, China's iron and steel industry has made tremendous progress in both quantity and quality, met the needs of national development, possessed strong international competitiveness, and the road to a strong iron and steel country shows bright prospects. Generally speaking, from the aspects of product service capability, industrial scale effect and employee quality, the comprehensive strength of China's iron and steel industry has been in the world first-class square, and it is one of the industries that are the first to enter the advanced ranks of manufacturing powers.

Since 2015, the key word for the development of iron and steel industry is "supply-side reform". For the significance of supply-side reform, Li Xinchuang believes that the first is to unify ideological understanding, clarify the judgment of the serious excess of iron and steel production capacity, strengthen the determination of the strong men to break their wrists to reduce production capacity, and integrate all aspects of ideas, objectives and actions into the central decision-making deployment. Second, the problem of "floor steel" which has plagued the iron and steel industry for many years has been effectively solved. About 140 million tons of relevant capacity has been withdrawn from the market. Third, the "de-production capacity" has actually reduced the excess steel production capacity in China. The iron and steel industry completed the upper limit of 100 million to 150 million tons of iron and steel production capacity set in the 13th Five-Year Plan two years ahead of schedule. Fourth, unprecedented in the history of world industry, it has promoted the steady withdrawal of billions of tons of excess iron and steel production capacity, made China's contribution to solving the global iron and steel surplus problem, provided China's wisdom, highlighted the responsibility of the world's largest steel power, and established the international image of a responsible big country. Fifth, to promote iron and steel enterprises to establish new development concepts, promote green environmental protection, independent innovation and other new concepts are deeply rooted in the future development of iron and steel enterprises. Sixth, it has effectively restrained the illegal and illegal new steel production projects. Seventh, we should promote a substantial recovery in the efficiency of the iron and steel industry. In 2019, China's iron and steel industry is facing many challenges. Iron ore prices have been rising all the way, and the profitability of the industry has been greatly affected. At the same time, there is always the risk of resurgence of dead ash and resurgence of "floor steel" to relieve the pressure of new production capacity.

"China's iron ore demand will remain high for a long time, and still need to achieve supply security through the global market." Li Xinjian proposed to strengthen the work from five aspects: first, to speed up the joint restructuring of domestic iron and steel enterprises, improve industry concentration to enhance the pricing capacity of iron ore; second, to control domestic iron and steel production by total environmental protection; third, to control steel exports by pollutant emission level; fourth, to strengthen the construction of scrap recycling system; and fifth, to strengthen the construction of scrap recycling system. Strengthen the monitoring and supervision of iron ore financial and trade instruments. For the future development of the iron and steel industry, Li Xinchuang believed that first, we should consolidate the achievements of capacity removal, stop the resurgence of "strip steel", seriously deal with new capacity-added projects, and strictly supervise capacity replacement projects throughout the process. Second, we should speed up the construction and improvement of a fair competitive market environment, accelerate the optimal allocation of resources and promote the "survival of the fittest" from the aspects of environmental protection, taxation, import and export, and product quality. Thirdly, we should accelerate mergers and reorganizations, enhance industrial concentration, enhance the industry's ability to regulate and control its own supply, and enhance the profit distribution ability of iron and steel in the industrial chain, so as to provide strong support for the healthy and sustainable development of iron and steel. At present, China's economy is changing from high-speed growth to high-quality development stage. Structural adjustment and transformation and upgrading have become an important theme for the healthy development of China's iron and steel industry in the new era. Li Xinchuang believes that the way to achieve high-quality development of the iron and steel industry is to promote in-depth "Nine Industries" coordination, reshape the industrial value chain and comprehensively improve the competitiveness of the iron and steel industry.

Firstly, we should speed up the implementation of ultra-low emission transformation and establish an effective and sustainable modern green factory, green industrial chain and product system; secondly, we should accelerate the restructuring of iron and steel enterprises and build a world-class iron and steel enterprise group with international competitiveness through orderly operation, with the core of enhancing competitiveness; and thirdly, quality. To improve the quality of products and services in an all-round way and to build a brand system that integrates quality, service, innovation and culture; to standardize and lead enterprises to establish enterprise standard system adapted to market competition and technological progress; and to differentiate, to locate enterprises accurately, to define development strategies and implementation paths, and to do a good job at the same time. Strategic differentiation, product differentiation and brand differentiation; Sixth, service-oriented, iron and steel enterprises should change from purely manufacturing value-added to manufacturing value-added and service synergistic value-added, thus promoting the transformation of business model; Seventh, intellectualization to comprehensively improve the competitiveness of iron and steel enterprises; Eighth, diversification to form a vertical extension and horizontal extension along the iron and steel industry. Diversified management system of coupling or territorial integration; Ninth, internationalization, integration and utilization of global resources and network system, development of production capacity, engineering technology, upstream and downstream industrial chains, R&D, trade.