CISA: the recovery of profits in the iron and steel industry

On January 11, the first general meeting of the sixth session of CISA was held in Beijing. Gao Xiangming, chairman in office of China Steel Association in 2019 and chairman of TISCO group, said at the meeting that from 2015 to 2019, steel production kept a high growth, total steel exports fell, the structure was optimized, steel prices recovered and stabilized, industry profits rose, and asset liability ratio fell. Shen bin, the newly elected chairman in office of CISA in 2020 and chairman of Shagang Group, pointed out that in 2020, the steel industry should make joint efforts to promote a more stable operation of the industry. At the product end, we should strictly control the excessive increase of production capacity to prevent new excess; at the raw material end, we should ensure the healthy and stable operation of the iron ore market, form a joint force in resisting monopoly, speculation and improving the transparency of transactions, and promote the further improvement of the trade mechanism. In the past five years, the first general meeting of the sixth session of the China Iron and Steel Industry Association (CISA) was held.

At the meeting, Gao Xiangming summarized the achievements of the iron and steel industry in the past five years, mainly including six aspects: first, the success of capacity removal, and the industry's sustained and stable operation. According to Gao Xiangming, in 2015, China's crude steel production capacity reached 1128 million tons, while crude steel production was only 804 million tons, with a capacity utilization rate of 71.3%. From 2016 to 2018, it took only three years to successfully reduce crude steel production capacity by more than 150 million tons, and two years in advance exceeded the upper limit target of capacity removal proposed by the State Council; and "strip steel" was banned in an all-round way according to law. With the in-depth promotion of the work of resolving excess capacity of iron and steel, the production and demand of iron and steel have returned to balance, the industry operation has been basically stable, the economic benefits of enterprises have rebounded significantly, reaching the best level in history in 2018. The results of China's steel de capacity not only benefit Chinese steel enterprises, but also effectively promote the recovery of the world's steel industry. Specifically, the output of iron and steel has maintained a sustained high growth. In 2015, China's crude steel output was 804 million tons. It is estimated that in 2019, the crude steel output will reach about 980 million tons, with a cumulative growth of 176 million tons in five years, an increase of 21.9%. The total export volume of iron and steel decreased and the structure was optimized.

In 2015, China's steel exports reached a record high of 112 million tons, and it is expected to export 65 million tons in 2019. The ratio of steel plates to pipes increased from 51.99% to 73.25%. The export unit price increased from $559 / ton to $931 / ton. The steel price recovered and stabilized. In 2015, steel prices in the domestic market fell sharply. The annual average value of CSPI index is 66.43 points, and the average value in 2018 is 114.75 points. Although the index in 2019 is slightly lower than that in 2018, it is generally stable. Industry profits picked up and asset liability ratio fell. In 2015, the key statistics showed that the iron and steel enterprises had a loss of 84.688 billion yuan, and the profit in 2019 was expected to be 180 billion yuan; the asset liability ratio decreased from 71.04% at the end of 2015 to 63.59% at the end of November 2019. Second, we will promote the transformation of ultra-low emissions and significantly improve the level of green development of the industry. Gao Xiangming said that in recent years, under the pressure of the most stringent environmental protection standards in the world, the majority of iron and steel enterprises have actively carried out research on ultra-low emission technology of flue gas multi pollutants and high-temperature flue gas circulation and classification purification technology around five key processes, including coking, sintering (pelletizing), ironmaking, steelmaking and steel rolling.

Shougang, Baowu, Angang, hesteel, TISCO, Delong, Zhongtian, etc Iron enterprises vigorously promote the transformation of ultra-low emissions and take the lead in making breakthroughs. At the same time, through the reduction and replacement of equipment upgrading, a number of energy-saving and environmental protection technologies and indicators have reached the world's advanced level. Third, breakthroughs have been made in merger and reorganization, and the industrial organization structure has been further optimized. Gao pointed out that in recent years, substantial progress has been made in the merger and reorganization of the steel industry. Baowu reorganization has built China's world-class "iron and steel aircraft carrier"; after reorganization, Jianlong group has expanded its scale, optimized its layout, further improved its competitiveness and industrial status. Delong group restructured Bohai steel through judicial restructuring, with a combined capacity of 30 million tons, and entered the first echelon of the industry. CITIC special steel (23.540, 0.00, 0.00%) restructured and built the world's largest professional leading group of special steel. Shagang successfully reorganized northeast special steel, seized the technological commanding point, and general steel became "special". These classic cases with the nature of "breaking the situation" have played a positive role in the cross regional and cross ownership "mixed reform". Gao Xiangming, chairman in office of CISA and chairman of TISCO group in 2019. Fourth, the steel industry vigorously promotes scientific and technological innovation, and the comprehensive competitiveness of the industry is enhanced.

Gao said that in the past five years, focusing on the overall situation of national economic development, the iron and steel industry has carried out in-depth innovation driven development strategy, effectively promoting the transformation and upgrading of the iron and steel industry and enhancing its competitiveness. Specifically speaking, first, the investment in scientific research is growing and the ability of scientific and technological innovation is significantly improved. Second, the supporting effect of iron and steel materials is obviously enhanced. The third is the rapid development of intelligent steel manufacturing. Fourth, the leading role of standard innovation will be further played. Fifthly, "going out" is in full swing and the level of internationalization is improved. In recent years, with the promotion of the "one belt and one way" construction and the release of the "guiding opinions on promoting international cooperation in production and equipment manufacturing", iron and steel enterprises have taken a solid step in "going out", and a number of important overseas steel production base projects have emerged. In order to coordinate the industry's foreign investment cooperation, in March 2017, with the approval of the national development and Reform Commission, the "China Iron and steel international capacity cooperation enterprise alliance" was officially established, and the international capacity cooperation of iron and steel industry has entered a new stage, and the international level of the iron and steel industry has been significantly improved.

Sixth, the high-quality development of human resources in the industry. In the past five years, with the deepening of supply side structural reform, remarkable achievements have been made in human resources work in the iron and steel industry, with high-quality development features: first, labor efficiency has been greatly improved. Second, the personnel structure was significantly optimized. Third, the competitiveness of human capital has been significantly improved. 2020: promote differentiated environmental protection, limit production and strictly control the excessive increase of production capacity. Gao Xiangming said that in 2020, the iron and steel industry should focus on the following seven aspects: first, unify ideas, guide expectations, and maintain the stable operation of the industry. The iron and steel industry should completely change the old way of relying on scale expansion and low price competition, and unify the recognition to improve the quality and efficiency. Second, we will consolidate the achievements of supply side structural reform and strictly prohibit new production capacity. At present, CISA is cooperating with the government departments to carry out the work of finding out the production capacity and output of iron and steel; keeping the high-pressure situation and putting an end to the illegal increase of production capacity found in the special supervision; strictly implementing the new version of the Guiding Catalogue of industrial structure adjustment, and completely eliminating the steel products such as stainless steel, die steel, etc. mainly produced by the medium frequency furnace before June 2020 Backward technology, three is to promote differential environmental protection production limit and "peak shifting production", and accelerate the transformation of ultra-low emissions.

In 2020, the iron and steel industry will organize research and promote the implementation of "staggered peak production" in areas with concentrated iron and steel production capacity and excessive environmental load, promote further optimization of environmental protection classification management and control scheme, and oppose the implementation of "no difference" frequent stop and limit production for compliant iron and steel enterprises for any reason. It is suggested to carry out the mode of "peak shifting production" based on the total emission control and guided by differential control, to limit the backward, protect the advanced, and promote the overall environmental protection level and stable and efficient production. Fourth, actively promote the merger and reorganization of enterprises and improve the industrial concentration. Fifth, vigorously promote scientific and technological innovation. CISA will launch the construction of big data system of iron and steel industry in the near future to provide data support for iron and steel enterprises to develop new products. Sixth, establish and implement the steel raw material guarantee strategy. Strengthen information disclosure and market supervision; study and improve pricing mechanism of bulk commodities such as iron ore; take multiple measures to expand supply channels of iron ore.

Seventh, comprehensively strengthen the construction of the party. Shen bin, the newly elected chairman in office of CISA in 2020 and chairman of Shagang Group, said that in 2020, we should make joint efforts to promote more stable operation of the industry. At the product end, we should strictly control the excessive increase of production capacity to prevent new excess; at the raw material end, we should focus on the healthy and stable operation of the iron ore market, form a joint force in resisting monopoly and speculation, improving the transparency of transactions, and promote the further improvement of the trade mechanism. Shen bin pointed out that more practical measures should be taken to promote higher quality development. We will play a leading role in implementing national industrial policies, accelerating technological innovation, deepening the integration of "two modernizations", promoting intelligent manufacturing, realizing green development, and domestic substitution of high-end materials, accelerate the pace of structural adjustment, and promote the steel industry to move forward to the middle and high end of the global value chain. Shen Bin said that Shagang Group will fully support the association in performing its functions and providing good services, and vigorously promote information exchange, resource sharing, exchange and mutual learning among iron and steel enterprises.

It is worth noting that at the special report meeting on industrial chain cooperation and Development held on the same day, he Wenbo, Secretary of the Party committee of CISA, pointed out that at present, in the face of complex and profound changes in domestic conditions and international environment, coping with climate change and meeting the huge challenges of intelligent society, the iron and steel industry should quickly shift its focus from chemical solution of excess capacity to transformation and upgrading, high-quality development In the exhibition, we will continue to improve the level of green and intelligent, optimize the industrial and product structure, innovate the development concept, and create an upstream and downstream industrial chain and ecosystem of mutual benefit, win-win and coordinated development. "As the upstream and downstream partners, Chinese iron and steel enterprises are willing to strengthen exchanges and cooperation with automobile, shipbuilding, construction and other enterprises, jointly build a mutually beneficial, healthy development and long-term prosperity industrial chain, promote the implementation of the strategy of building a strong manufacturing country and the early realization of the two Centenary goals, so as to achieve a more sustainable beauty for the world economy and human society Good future makes its due contribution. " He Wenbo stressed.