Steel industry reincarnation

Abstract The elimination of backward production capacity in the steel industry has repeatedly been announced. However, in contrast, the production capacity of the steel industry has been leapfrogging. A list of enterprises that have eliminated backward production capacity once again shows the determination of the Ministry of Industry and Information Technology to promote the policy of eliminating backward production capacity. The Ministry of Industry and Information Technology said that the relevant parties...

The elimination of backward production capacity in the steel industry has repeatedly been announced. However, in contrast, the production capacity of the steel industry has been leapfrogging.

A list of enterprises that eliminated backward production capacity once again showed the determination of the Ministry of Industry and Information Technology to promote the policy of eliminating backward production capacity. The Ministry of Industry and Information Technology said that relevant parties should take effective measures to ensure that the backward production capacity of enterprises listed on the announcement list was Completely eliminated. Among them, 31.22 million tons of ironmaking, involving 96 enterprises; 27.94 million tons of steelmaking, involving 58 enterprises. In recent years, relevant state departments have been eliminating backward production capacity of the steel industry.

In the past few years, China's crude steel output has not decreased. Under the circumstances that the market will not change greatly in the second half of the year, the national crude steel output in 2011 will approach or even exceed 700 million tons, far exceeding the 660 million tons expected by the China Iron and Steel Association in the beginning of the year. .

Iron wrist steel

Eliminating backward production capacity is an old topic. Recently, the more stringent one was in September 2009. The National Development and Reform Commission (hereinafter referred to as the National Development and Reform Commission) had jointly held a joint meeting of ten ministries and commissions to curb overcapacity, and forwarded Guofa [2009] No. 38 on the suppression of production capacity in some industries. Notice of Several Opinions on Excessive and Repetitive Construction to Guide the Healthy Development of the Industry, and listed six major industries such as steel as key management targets.

According to Xinhua News Agency, on May 5, 2010, Premier Wen Jiabao proposed to use iron to eliminate backward production capacity. He stressed that the elimination of backward production capacity, accountability to the local unfinished leadership, according to the circumstances, the corresponding punishment, until the removal.

On May 13, 2010, the National Development and Reform Commission and the 10 ministries and commissions issued a document requesting the accelerated elimination of backward production capacity and guiding the healthy development of the industry. The steel industry became the first target of the “iron-clad policy”. This is not the first time the National Development and Reform Commission has issued such a document. “In three years, the project will not be approved, approved, and filed for two high-capacity and overcapacity industries,” said Xiong Bilin, inspector of the Industry Coordination Division of the National Development and Reform Commission.

Compared with the 2011 goal of eliminating backward production capacity issued by the Ministry of Industry and Information Technology in May this year, the task of the steel industry is even more arduous. Among them, the ironworks task increased the maximum, from 26.53 million tons to 31.22 million tons, steel and coke also increased from 26.27 million tons to 27.94 million tons and from 18.7 million tons to 19.75 million tons. From the perspective of decomposing and implementing the situation, the tasks of eliminating backward production capacity in industries such as iron, steel and coke in Hebei, Shanxi, Shandong and Henan provinces are heavier.

On the list of enterprises that eliminated backward production capacity, the names of several listed companies such as Jinan Iron and Steel, Chongqing Iron and Steel, Xinxing Casting Pipe and Guangzhou Iron and Steel Co., Ltd. appeared. Taking Jinan Iron and Steel as an example, the total production capacity of Jinan Iron and Steel is only over 10 million tons, and the backward production capacity of ironmaking that needs to be eliminated this time is as high as 2.8 million tons.

Numbers game

The local resistance encountered in eliminating backward production capacity is unprecedented. “The income of steel enterprises in most regions is an important source of local fiscal revenue. Steel mills with smaller scales can also generate considerable tax revenues when market demand is strong.” A local government official who did not want to be named said frankly, “The economic situation is not How is it good to turn off the steel mills that are not easy to build, not only will there be stability and employment placement problems, but also what industry to replace development?” For some local governments, eliminating backward production capacity and developing the economy seems to be one. A contradiction between one or the other. For many years, local governments have been the protagonists behind the steel companies. Eliminating the backward production capacity of steel can be in place, the real resistance is in the local government.

Officials from relevant departments of Hebei Province, a province with large steel production capacity, said that the steel industry has a very large role in the local economy. The steel production capacity has been eliminated in some places, which not only affects the steel mill itself, but also related industries, such as power plant benefits, which have fallen sharply. No wages.

The number of employees in China's iron and steel enterprises is as high as 3 million. Among the 31 mainland provinces and municipalities directly under the central government, only Tibet and Ningxia have no steel enterprises, and the other 29 provinces have steel enterprises. Among them, there are only 10 provinces in 2009. The output of crude steel exceeds 10 million tons, and the output of crude steel in the other 19 provinces is less than 10 million tons. Some of the provincial steel production is even more than 200,000 tons.

It can be seen that the iron and steel industry is blooming everywhere in China, whether it is “big and complete” or “small but complete”. In short, the princes and the rulings are all in a common goal: to enlarge the local GDP and to the local government. Increase income.

“GDP is still dominant in the performance evaluation of local governments. As long as there is no fundamental change in this assessment mechanism, it is doubtful that local governments can implement the elimination of backward production capacity.” An industry insider who did not want to be named frankly .

Hebei Zhangjiakou Handan Iron and Steel Co., Ltd. appeared in the "2010 Iron and Steel Elimination of Backward Capacity Enterprises List", and the company said that its 210 cubic meter blast furnace was completely dismantled in June.

"The 210 cubic meters of small blast furnace that we dismantled has not been used for a long time. It is not economical. It used to be stopped and not demolished. It has now been removed. The blast furnace that was removed has appeared on the elimination list. Industry insiders say, This capacity, which was actually abandoned before the demolition, is not low in this list."

"The name and quantity of this outdated capacity have been reported by the local authorities. It is not ruled out that local governments have taken the opportunity to phase out the already eliminated capacity to retain the existing capacity," said Lange Steel analyst Zhang Lin.

People from the Hebei Metallurgical Association also agree with Zhang Lin: Tangshan’s steel industry accounts for a very high proportion of GDP. Tangshan City and the following districts and counties are under maintenance. Many small steel mills should have been eliminated three years ago, but still Lived very well.

Expansion mystery

A veteran of the Hebei steel industry said: "In fact, while the policy is promoting the elimination, it has inadvertently carried out a reverse push - capacity expansion. In order to comply with industrial policies, small steel enterprises must continue to expand through expansion. The power of survival. For them, the scale means not only development, but also life and death. The various countermeasures corresponding to the policy, although old-fashioned, are repeatedly prohibited. For example, the above-mentioned use of abandoned blast furnace to offset the target task, such as "trade-in ", "to change small". Before the old one was removed, the steel mills basically had built new projects. No boss would be so stupid, and the existing blast furnace would be dismantled without prior preparation. Another common method is to upgrade and upgrade. The blast furnace is overhauled every year, and some blast furnaces have reached the service life, which has become the best time to upgrade the equipment. No matter the annual output is millions of tons, the production capacity has already been Listed in the top three in the country, steel mills of all sizes have frankly plans to expand production capacity in the near future."

Of course, the expansion of production capacity of steel mills is also a lot of resistance. The State Council document clearly stipulates that no projects for the expansion of production capacity of the steel industry will be approved until 2011. At the same time, the increasingly tight credit policy and differential electricity pricing system for the steel industry has indeed put the industry at a higher cost.

Song Jijun, vice president of Hebei Iron and Steel Association, said: "The construction of a new blast furnace of about 1000 cubic meters will cost about 8 to 1 billion yuan. The overall construction of the plant will take about two years. The current credit tightening of the steel industry allows enterprises to go from banks. The possibility of obtaining loans is very small, mostly relying on inter-bank lending or non-bank financial institutions, so the cost of capital is much higher than before."

In other words, under the current situation, the pressure on steel companies to expand is indeed growing. But companies have to continue in order to survive. As it is currently impossible to determine whether the blast furnace at the edge of the elimination standard still needs to be eliminated if it meets the environmental protection requirements, the company will accelerate the launch of the new project on the one hand and strive to deploy environmental protection facilities on the other hand.

A veteran of the Tangshan Fengrun Iron and Steel Industry Association: “In fact, the “hand of the market” has prompted many private steel enterprises in Tangshan to actively eliminate outdated equipment. For example, the volume of blast furnaces for large and medium-sized steel private enterprises has exceeded 450 cubic meters.” Come, the elimination effect of the market is the most cruel. For the elimination, the policy is more often played by the trend.

Speed ​​of life and death

Some of the large steel companies that have been “named” by the Ministry of Industry and Information Technology seem to have a good idea. For the steel industry, eliminating backward production capacity can be described as a big problem. “The next step is to develop energy-saving and emission-reducing technologies in the future.” Wang Yifang, general manager of Hebei Iron and Steel Group, and Li Xiaobo, chairman of Taigang Group, said that the steel industry has great pressure on energy conservation and emission reduction, and there are many problems in eliminating backwardness.

If it is a task for large steel enterprises to eliminate backward production capacity, then for many small and medium-sized private steel enterprises, this is a major event that affects the survival of enterprises. If an enterprise that fails to eliminate backward production capacity within the prescribed time limit revokes the pollutant discharge permit, the banking financial institution shall not provide any form of new credit support, and the investment management department shall not approve and approve the new investment project, and the land and resources management department shall not approve the new investment. For the additional land, the relevant management department shall not handle the production license, and the production license and safety production license shall be withdrawn according to law.

Zhang Lihua, general manager of private steel enterprise Tianjin Rongcheng Iron and Steel Co., said that compared with the small steel enterprise Rongcheng Steel, it is fortunate because many small steel enterprises have to stop or shut down due to environmental problems. “Small steel enterprises are simply dying,” he said.

In addition, enterprises that fail to eliminate backward production capacity according to regulations and are ordered to close or revoke by the local government will take measures to cancel the industrial and commercial registration cancellation within a time limit or revoke the industrial and commercial business license according to law. When necessary, relevant government departments may also require power supply companies to stop supplying power to enterprises with backward production capacity according to law.

The industry believes that from the perspective of the entire industry, despite the expected elimination of backward production capacity, the over-targeting of the task and the actual elimination of backward production capacity will have a greater impact on market supply. The reduction in supply has driven up the price of steel and has helped the improvement of the profitability of the entire industry.

In the long run, the elimination of backward production capacity involves more than 200 steel companies, and SMEs are greatly affected. Small enterprises with small scale and poor earnings may be merged or restructured, the concentration of the industry will be improved, and the industry will be disordered. The state of competition will gradually change. This will promote the healthy development of the entire industry, while at the same time bringing a better market environment for the development of listed companies, the above said.

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