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“The biggest problem facing the adjustment and revitalization of China’s steel industry is a serious surplus of production capacity. This international financial crisis only advanced the outbreak of contradictions, and the manifestations of contradictions are even more compelling.†said Li Chapo, chairman of Hebei Jingye Group. .
According to the People's Daily report yesterday, as of the end of 2008, China's crude steel production capacity reached 660 million tons, exceeding the actual demand by about 100 million tons. A considerable part of this is blind investment in illegal production in recent years.
As early as June 2006, eight ministries and commissions including the National Development and Reform Commission proposed the elimination of outdated steel production capacity, but it is indeed difficult in practice. A technician of Hebei Jingye Group told the reporter: “In some places, there are one or two hundred cubic meters or even dozens of cubic meters of stoves. According to the national policy, before the end of 2010, 300 cubic meters or less of blast furnaces must be eliminated. In the future, the standard for eliminating outdated production capacity will be increased to blast furnaces below 1,000 cubic meters."
Last November, when production of almost all steel grades fell, there was still a 13.7% increase in the output of hot-rolled narrow strip steel, which represented an outdated production capacity.
Is it difficult to eliminate backward production capacity?
Wang Yifang, chairman of Hebei Iron and Steel Group, analyzed that, first of all, it is difficult to eliminate the market, these small companies respond quickly to changes in the market, the market is ready to start a good ignition, the market will stop production for a holiday. Secondly, the elimination of policies is difficult, the number of these small steel mills is large, and the layout is scattered. They are “small†and “backward†in the industry. However, they are large profits and taxes for local governments, and they are the economic pillar. Despite industrial policies, However, considering the local GDP and employment, local governments often strive to protect.
It is understood that in order to eliminate outdated production capacity, some developed countries are funded by the state to purchase, compensate relevant enterprises, and jointly solve local social problems. During the interview with reporters, several steel company executives stated that they could not simply attribute the difficulty of eliminating backward production capacity to local protection. Some backward production capacity is not the backward quality of the product, but refers to the level of environmental protection, energy conservation and emission reduction that do not meet the standards. The product also has a certain market. Therefore, although it is very necessary to establish a sound market exit mechanism for steel enterprises, if relevant supporting measures are not in place, eliminating backward production capacity is an empty phrase.
Li Xiaobo, chairman of Taiyuan Iron and Steel Group, said that the fundamental elimination of backward production capacity has to rely on the market's invisible "hands", but in light of China's actual situation, the government's only "hands" are more important. Now, this market hand is already very “hard†and it is hoped that relevant government departments will increase the implementation of industrial policies and supplement them with a proper exit mechanism.
It is difficult to eliminate backward production capacity in the steel industry.
Although it is very necessary to establish a sound market exit mechanism for iron and steel enterprises, if relevant supporting measures are not in place, eliminating backward production capacity is an empty phrase.