China's steel industry downturn will continue for another five years

Miao Changxing, deputy director of the Industrial Policy Department of the Ministry of Industry and Information Technology, said at the "2013 Metallurgical Enterprise Management Innovation Summit Forum" that the downturn in the steel industry will continue for about five years, and the industry "winter" has just begun.

According to the latest data of China Steel Association, in August, the main steel industry maintained rapid development and boosted steel prices. Overall, although the steel market has gradually entered the peak season, due to the fragile supply and demand balance, the company's profitability is low, steel production has risen, and steel prices will fluctuate at a low level in the later period.

In July, the profit margin of 86 key steel enterprises nationwide rose to 0.77%, but it is still at the bottom of the national industrial industry. "The current production and operation is very difficult, and it is still struggling on the edge of loss; the industry must transform, but it is not easy." Liu Zhenjiang, secretary of the party committee and vice president of China Iron and Steel Association, said that management innovation is the main switch.

Market is forced to transform

In the context of declining economic growth and overcapacity, raw material costs continue to be high, steel prices are falling all the time, and environmental pressures are rising sharply, causing the overall operating situation of the steel industry to worsen.

Liu Zhenjiang said that management innovation is the main switch, whether it is to deal with current difficulties or to carry out transformation and upgrading. The transformation of the iron and steel enterprise is unusual, and it is a phased change in the country's economic development. It is a leap from the scale to the quality.

Miao Changxing, deputy director of the Industrial Policy Department of the Ministry of Industry and Information Technology, said that the downturn in the steel industry will continue for five years. Xu Lejiang, president of the China Iron and Steel Association, also said that the difficult period of the steel industry should last until the end of the 13th Five-Year Plan. The “winter” of the steel industry has only just begun.

At present, China's economic growth has entered a critical moment of transformation and upgrading. After the economic growth slowed down, iron and steel enterprises still maintained a production-oriented production model with production as the core, resulting in high costs. Under this circumstance, giving full play to management innovation and solving the problem of sustainable development of iron and steel enterprises has become an important basis for promoting the pace of transformation and upgrading of steel enterprises.

For the management innovation of iron and steel enterprises, Miao Changxing proposed: To promote the innovation of corporate management concepts, this is the primary task. When the cost is high, the product price falls for a long time, the profit is squeezed, and the external environment is deteriorating, only the eyes are inward, and the management is to benefit; the enterprise management mechanism system innovation should be strengthened, and the business model innovation should be more emphasized. To change from a manufacturer to a service provider.

Drawing on the Tanggang model

When everyone vigorously expanded production capacity, Tang Gang chose a green transformation.

Liu Zhenjiang said that before the 2008 financial crisis, steel production was around 400 million tons, and steel production capacity increased by 200 million tons in 2009-2011. If steel companies begin to control production capacity in 2009, they can now reduce production by at least 100 million tons, and the pressure of overcapacity will not be so great. “Tangshan is the first to upgrade and upgrade.”

Wang Lanyu, general manager of Tangshan Steel, told China Securities Journal that the green transformation of Tangshan Iron and Steel was first reflected in the active elimination of backward production capacity and vigorous implementation of environmental management in the plant. In August 2008, Tangshan Iron and Steel Co., Ltd. began a large-scale comprehensive environmental management project, and eliminated a large number of backward equipment and production capacity in advance, all of which will be used for greening. The newly added green area is 770,000 square meters. The green coverage rate has increased from 21% to 50%. At the same time vigorously implement energy conservation and emission reduction Since 2008, Tangshan has invested 3.18 billion yuan to implement 32 energy-saving and emission reduction technological transformation projects. In addition, continue to promote the circular economy. Since 2010, the energy cost of Tangshan Steel's per-ton steel has been reduced by 50-100 yuan per year, and the cumulative cost-effectiveness in the past three years has reached nearly 3 billion yuan.

On the basis of “green transformation”, Tangshan Iron and Steel has begun “market transformation”. Wang Lanyu said that Tangshan's "market-oriented transformation" is guided by the transformation of the production organization model, with efficiency as the center, market-oriented, innovative production organization model, with low cost, high efficiency and refinement as the main features, and closer to The market meets user needs.

In 2012, Tangshan Steel tapped potential and increased efficiency by 5.06 billion yuan. In the first half of 2013, Tangshan Steel continued to tap potential and increase efficiency by 2.068 billion yuan. Among them, the cost of ironmaking process was reduced by 70 yuan/ton on the basis of a decrease of 100 yuan in the previous year, and it continued to rank among the top in the industry; the inventory capital occupation remained stable at less than 6 billion yuan, down 3.2 billion yuan from the beginning of 2012.

Yin Ruizhen, an academician of the Chinese Academy of Engineering, said that the transformation and upgrading of Tangshan Iron and Steel reflects the combination of technology, investment and management, and reflects the synergy of economic, environmental and social benefits. It has a leading and demonstrative role in the transformation and upgrading of China's steel industry.

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