Steel and electrolytic aluminum excess capacity reduction is difficult to replace

On September 13, the Ministry of Industry and Information Technology released the 2011 Summer Report on the Operation of China's Industrial Economy. The report stated that the problem of overcapacity caused by repeated investment in heavy chemical industries in recent years has affected the sustainable and healthy development of the industry. At the same time, many industries with excess capacity are accompanied by a considerable amount of backward production capacity.

To this end, the next step will continue to promote the implementation of mergers and acquisitions and industrial chain integration in key industries such as automobiles, iron and steel, non-ferrous metals, and building materials, improve the backward production capacity withdrawal mechanism, and establish and improve the backward production capacity reduction replacement method for overcapacity industries.

The Ministry of Industry and Information Technology has announced the elimination of backward production capacity for the “Twelfth Five-Year Plan” of the four major industries. It means that 70 million tons of ironmaking, more than 250 million tons of cement, 6 million tons of ferroalloy, and 40 million tons will still need to be eliminated during the 12th Five-Year Plan period. The coke's backward production capacity.

The Ministry of Industry and Information Technology has announced the backward production capacity targets for various industries. The Ministry of Industry and Information Technology is concerned about the relatively large number of lagging production capacities. “In the 18 industrial sectors involving the elimination of backward production capacity, there were 10 industries with higher target missions than last year, and faced with personnel resettlement, debt disposal, and taking into account local interests. More difficulty and pressure." The above report said.

However, the reporter learned that although the National Development and Reform Commission has not approved new projects since last year, the local governments generally adopt equal measures of capacity replacement, or take measures to remove large furnaces to increase production capacity. The actual production capacity of various industries is still increasing.

At present, the Ministry of Industry and Information Technology has announced that the elimination of backward production capacity in 2011 will account for almost 1/3-1/2 of those that need to be phased out in the “Twelfth Five-year Plan”. Does this mean that the Ministry of Industry and Information Technology needs to complete the task of eliminating backward production capacity ahead of schedule, or increase the target? According to sources close to the Ministry of Industry and Information Technology, this may not be the case.

Excess industry capacity is still growing rapidly

According to the data provided by the National Bureau of Statistics and the Ministry of Industry and Information Technology, the industry that has been identified by the Ministry of Industry and Information as an overcapacity industry still has a situation in which the industry accelerates production.

For example, in August, the production of steel was 77 million tons, and the average daily output was 2.48 million tons, an increase of 12.9%. The monthly output of electrolytic aluminum was 10.2 million tons, an increase of 6.8%. Flat glass output was 434 million weight boxes, an increase of 13.8%. The above industries are all industries with excess capacity of the Ministry of Industry and Information Technology. According to a report released by the Ministry of Industry and Information Technology, there are currently excess capacity problems in the steelmaking, ironmaking, electrolytic aluminum, coke, cement, and chemical fiber industries.

Zhang Lin, the Lange Steel Information Research Center, told this reporter that this year's steel output may exceed 700 million tons, which indicates that the central government's fear of excess in No. 38 in 2009 has already appeared. "At that time, it was said that the potential production capacity was 700 million tons, and the potential production capacity is now more than 800 million tons," she said.

The above-mentioned rapid growth in production capacity has caused the industry's profit margins to decline rapidly. For example, from January to July, the main profit rate of the steel industry was only 2.4%, down 0.24 percentage points year-on-year, and the profit increased by 17.1% year-on-year. The loss was as high as 20%, and quite a few companies were on the verge of losses.

According to Yang Wenchun, secretary-general of the Guangxi Iron Alloy Association, iron alloys are closely related to the iron and steel industry. Under the circumstances that the price of upstream minerals has risen and prices of downstream products have fallen, these industries have been making poor profits as an intermediate industry product. "The operating rate of ferroalloys is already good at 50%. Many places are produced at night," he said.

It is reported that the plate glass manufacturing industry, which was defined as surplus, realized a profit of 1.44 billion yuan in August, a drop of 65.9%. The cement industry realized a profit of 55.8 billion yuan, an increase of 1.6 times. However, a member of the Building Materials Association believes that the actual cement profits may not be so high. For example, Hebei earns 20-40 yuan per ton of cement, and a 10% profit margin is already good.

Hong Liang, an analyst at Galaxy Securities's building materials industry, believes that the profit growth of the cement industry is fast, mainly because the growth of actual production capacity has reached effective control. "The increase in actual production is still far behind the potential production capacity. Cement is still in excess."

Previously, according to the 2009 No. 38 document, China's cement production capacity in 2008 was 1.87 billion tons, and the backward production capacity was about 500 million tons. Together with the cement production line under construction, after these capacities were all completed, the cement production capacity would reach 2.7 billion tons, and the market The demand is only 1.6 billion tons, and the production capacity will be in serious excess. The other aluminum production capacity is 18 million tons, accounting for 42.9% of the world, and the capacity utilization rate is only 73.2%.

Reduction of displacement is very difficult

In response to this, the Ministry of Industry and Information Technology's summer report pointed out that the next step is to use more market-oriented tools and means to promote structural adjustment, and to further give play to the guiding role of industrial policy, and focus its policy on the adjustment structure.

To this end, it will continue to promote the implementation of mergers, acquisitions, mergers, and industrial chain integration in key industries such as automobiles, steels, nonferrous metals, and building materials, improve the backward production capacity withdrawal mechanism, and establish and improve the backward production capacity reduction and displacement methods for overcapacity industries.

Previously, the Ministry of Industry and Information Technology has proposed that steelmaking production capacity should be phased out by 26.27 million tons, cement production capacity by 133 million tons, ferroalloy production capacity by 1.857 million tons, and coke production capacity by 19.75 million tons in 2011, accounting for 1/3-1/2 of the 12th Five-year elimination target. Not equal. Among them, the cement industry's capacity elimination goal in 2011 even exceeded half of the “Twelfth Five Year Plan” target.

However, this does not mean that the Ministry of Industry and Information Technology will soon achieve the “12th Five-Year” backward production target within 2 or 3 years in advance. According to Yang Wenchun, Secretary-General of the Guangxi Ferroalloy Association, in general, when the local out-of-process capacity is eliminated, there is very little to reduce the production capacity (reduction), usually equivalent replacement, or increase production capacity.

Over the years, the relevant state departments have been saying that they must prevent excess capacity. However, in industries such as steel, the production capacity has been expanded from tens of millions to 700 million tons or more. Zhang Lin, Lange Iron and Steel Information Research Center believes that the cause of such a strange cycle is that different types of corporate profits are mixed.

For example, at present, the entire steel industry is squeezed by upstream iron ore price hikes and the profitability of downstream steel price declines. However, it is interesting that larger companies, especially state-owned enterprises, produce more high-end plates because of sluggish shipbuilding and other industries. , The efficiency of sheet metal is not good, but the wire with very low technological content, such as rebar for construction, etc., because the market is good, many small private enterprises have very good profits, and these companies will eventually increase their total production capacity regardless of whether or not to eliminate backward production capacity. .

This has led to the country’s potential steel production capacity, which may have reached 890 million tons. “The country has not approved new projects such as steel for two years, but the actual production capacity is increasing. The story behind this is that the more backward production capacity is eliminated, the total production capacity will continue to increase.” Zhang Lin said.

According to understanding, the current elimination of backward production capacity has made great progress. In 2011, the elimination of backward production capacity targets for 18 industrial sectors was scheduled to be released on time and has been resolved into 2255 companies. Among them, the Ministry of Industry and Information Technology has increased its efforts to regulate and control some industries with excess capacity such as electrolytic aluminum, flat glass, and coal chemical industry. However, in the end, as many listed companies claim to have already eliminated backward production capacity, the actual results are still to be investigated further.