Source: Economic Daily
In this steel cold rolling mill, cranes are hoisting steel coils. Photo by Xinhua News Agency reporter Yang Qing
On October 25, the China Iron and Steel Association held a third-quarter information conference in Beijing. According to the data, from January to September this year, the total profit of steel enterprises members of the China Steel Association was 319.3 billion yuan, an increase of 1.23 times year-on-year. In September, the national crude steel daily production level fell to the lowest value in the past three years, and the output reduction policy took effect.
Overall, the steel industry operated well in the first three quarters, but it also faced challenges such as a more complex market environment and an increase in the difficulty of reducing costs and increasing efficiency. Qu Xiuli, vice president and secretary general of the China Steel Association, stressed that the steel industry should seek steady progress and reduce development.
Yield reduction is effective
China is the world's largest steel producer, with crude steel production accounting for more than half of global crude steel production. As a major carbon emitter in the manufacturing industry, the steel industry has become one of the key points of carbon emission reduction in China.
Since the beginning of this year, on the basis of strictly controlling new production capacity and strengthening the control of total energy, the state has formulated an annual crude steel output of no higher than last year's target and an industrial policy to restrict a large number of steel exports. Over time, the effects of relevant policies have become increasingly apparent.
According to the data released by the National Bureau of Statistics, from January to September, the national pig iron, crude steel and steel production was 671.07 million tons, 805.89 million tons and 102035 million tons, down 1.3%, 2.0% and 4.6% year-on-year, respectively, and the growth rate was 5.1, 2.5 and 1.0 percentage points lower than the same period last year.
On a quarterly basis, crude steel production in the first quarter increased by 16% year-on-year, in the second quarter by 8% year-on-year, and in the third quarter, it fell by 15% year-on-year. Among them, in September, the national crude steel daily output was 2.4583 million tons, down 8.45% month-on-month, down 21.2% year-on-year, down 24.6% from the peak in April, the lowest value in the past three years.
"As long as the daily crude steel production level in the fourth quarter remains at the level of September, the annual crude steel production can be guaranteed to decline year-on-year." Wang Yingsheng, chief economist of the China Steel Association, pointed out that if China's crude steel production in the fourth quarter is calculated according to the daily production level in September, then the crude steel production for the whole year will be at the level of 1.03 billion tons, a decrease of more than 30 million tons compared with last year's 1.065 billion tons.
The slowdown in the growth rate of crude steel production in China, in addition to being affected by policy factors, is directly related to changes in market demand. Li Xinchuang, secretary of the party committee and chief engineer of the Metallurgical Industry Planning and Research Institute, pointed out that the level of China's manufacturing boom has declined, and the market demand has declined. On the supply side, as the reduction of crude steel production has entered a substantial promotion stage, domestic crude steel production will remain low.00. On the consumption side, it is expected that China's steel consumption demand in 2021 will be basically the same or slightly reduced in 2020.
In terms of exports, China has adjusted tariffs on steel products twice this year, reflecting the policy orientation that domestic steel production should give priority to meeting domestic demand. According to the data released by the General Administration of Customs, from January to September, the country exported 53.02 million tons of steel, an increase of 31.3% year-on-year, of which the export volume from July to September fell for three consecutive months, and exported 4.92 million tons in September, down 2.6% month-on-month, down 38.3% from the highest value in April (7.97 million tons).
High efficiency is facing the test
Since the beginning of this year, China's economy has continued to recover and develop, bringing huge business opportunities to the steel industry. However, the economic recovery process of various countries is differentiated, the external environmental risks and challenges are increasing, and the domestic economic recovery is still unstable and uneven, which also makes the operation of the industry face uncertainty.
The data shows that the market volatility is larger, and the prices of the main raw materials and steel products used in steel production have gradually risen, and the overall level is higher than last year. From January to September, the average price of imported fine ore was 171.67 US dollars / ton, up 72.64% year-on-year, the price of coking coal increased by 57.07% year-on-year, the price of coke increased by 56.88% year-on-year, and the price of scrap steel rose by 36.48% year-on-year.
From January to September, the average value of China's steel price index (CSPI) was 143.26 points, up 39.85% year-on-year.
Thanks to the pull of market demand and the continuous benchmarking of enterprises, the economic benefits of the steel industry have been significantly improved, and the asset-liability structure has been further optimized. According to the statistics of the Steel Association, from January to September, the operating income of member steel enterprises was 5,299.8 billion yuan, an increase of 42.52% year-on-year; the operating cost was 4,694.2 billion yuan, an increase of 39.65% year-on-year, and the cost increase was 2.87 percentage points lower than the revenue growth rate; the total profit was 319.3 billion yuan, an increase of 1.23 times; the average sales profit margin was 6.03%, up 2.18 percentage points year-on-year. At the end of September, the asset-liability ratio of member steel companies was 61.37%, down 1.58 percentage points year-on-year.
It is worth noting that compared with the previous five months of profit growth, after June, due to factors such as declining production, price decline, and rising costs, the profits of china steel association member enterprises fell month-on-month. Among them, the profit in September was 29.4 billion yuan, down 10.8% month-on-month; the sales profit margin was 4.74%, down 0.68 percentage points month-on-month.
Qu Xiuli pointed out that the price of resources and energy has risen sharply, and it is more difficult for enterprises to reduce costs and increase efficiency. Since the second half of the year, under the action of various measures, iron ore prices have fallen sharply, currently fluctuating around $120 / ton, but still at a high level. At the same time, the supply and demand relationship between coal and coke is tight, and the price has risen sharply and rapidly. Especially since September, due to the tight power supply, steel companies have reduced production and stopped production, and the cost of enterprises will increase significantly, and the upward pressure on costs will be difficult to change in the short term, and the profitability of steel companies is facing a downward trend.
Reducing quantity and improving quality is key
In the context of low-carbon development, the steel industry, as an energy-intensive industry, needs to be reshaped. The "Opinions of the CPC Central Committee and the State Council on The Complete, Accurate and Comprehensive Implementation of the New Development Concept to Do a Good Job in Carbon Peaking and Carbon Neutrality" just released clearly put forward a number of measures such as formulating an implementation plan for carbon peaking in the steel industry, consolidating the results of capacity reduction, and resolutely curbing the blind development of high-energy-consuming and high-emission projects.
For some time, with the increasing prosperity of the steel market, the impulse to expand steel production capacity in some places and enterprises has risen. This year, the relevant departments have organized a nationwide "review" of steel production capacity and crude steel output reduction, and continuously consolidated and improved the effectiveness of relevant work.
Qu Xiuli stressed that the "double control" of production capacity and output, the "double control" of total energy consumption intensity and the "double carbon" target require that the steel industry must reduce its development. Iron and steel enterprises should effectively unify their thoughts and actions with the decision-making and deployment of the central government to strictly control steel production capacity, truly change the development concept, strictly implement the relevant provisions and requirements of the implementation measures for the replacement of steel production capacity, maintain the results of capacity reduction, continue to promote supply-side structural reform, accelerate the pace of structural adjustment and transformation and upgrading, and continue to optimize and improve the industrial structure.
"The quantitative growth mode of China's steel industry has gradually touched the ceiling, and the space for high-quality development is infinitely broad." Chen Ziqi, deputy secretary-general of the Expert Academic Committee of China International Engineering Consulting Co., Ltd., said that the development of China's emerging industries, the transformation of traditional industries, the improvement of people's living standards, and the green development and "double carbon" goals have put forward new requirements for the high-quality development of the steel industry. The steel industry must enhance the endogenous driving force for the development of independent innovation capabilities, develop new materials and new products such as super high-speed rail steel, new energy steel, large aircraft steel, green seismic construction steel, ultra-high-strength steel, etc., develop new processes and new technologies such as low-carbon metallurgy, and achieve a higher level of dynamic balance between supply and demand.
According to the news of the China Steel Association, relevant planning and policy documents such as the implementation plan for carbon peaking in the steel industry are being formulated, and the steel association also proposes to achieve the goal of carbon peaking during the "14th Five-Year Plan" period by 2030. He Wenbo, executive chairman of the China Steel Association, said a few days ago that to achieve the double carbon goal, it is fundamentally necessary to find a way out in technological progress, work research and development, and seek breakthroughs in technological innovation; we must accelerate the reform of the research and development system and mechanism and stimulate the vitality of innovation. (Economic Daily reporter Zhou Lei)