It is reported that China economic prosperity index in steel industry shows that in the third quarter of 2009, the prosperity degree of China's steel industry kept dropping, and both the price level and export of products were still depressed, but benefited from recovered national economy and increased active factors for economic operation, the steel output has increased continuously, the investment on fixed assets has risen stably and product sales income, total profits and total taxes have all increased.
In accordance with the data released by Ministry of Industry and Information Technology on October 27th in the first three quarters this year, China crude steel output reached 420 million tonnes up by 7.5%YoY, steel output breached 500 million tonnes up by 12.4%YoY.
In the H1 of this year, driven by the national policy of expanding domestic demand, steel industry has walked out of the slump gradually, taking on the state of output increase, price recovery and better profit. Inside analysts said that since the Q3 of this year, the profit of domestic steel enterprise has improved remarkably.
Recently, both Laiwu Steel Corp and Inner Mongolian Baotou Steel Union Co Ltd have publicized their reports of the Q3 of this year respectively. From July to September, the net profit of Laiwu Steel Corp reached CNY 426 million up by 89.24%YoY the net profit of Inner Mongolian Baotou Steel Union Co Ltd reached CNY 419 million. Previously, the report of the Q3 released by SGIS Songshan Co Ltd showed that its net profit in this Q3 is CNY 257 million soaring 516.49%YoY.
1. Evident output surplus
In the end of September, State Council officially approved Several Suggestions on Restricting Output Surplus and Overlapped Construction in Some Industries and Guiding Healthy Industrial Development which is jointly constituted by National Development and Reform Commission and Ministry of Industry and Information Technology. Several Suggestions definitely points out such problems as output surplus and overlapped construction in many fields are still evident, even intensifying in some fields.
The surplus of steel output stands in the breach. Data show that in 2008, China crude steel output was 660 million tonnes while the demand was only around 500 million tonnes and about one quarter of steel and finished products depended on international markets. In the first half of 2009, the investment amount of the whole industry was CNY 140.55 billion. Nowadays, the crude steel output of the projects under construction is 58 million tonnes, most of which have violated rules and regulations. If control is not timely, the crude steel output will exceed 700 million tonnes and the contradiction of output surplus will intensify further.
Mr Zhu Hongren Chief Engineer of Ministry of Industry and Information Technology said "The issue of excessively rapid increase of output has restricted the sound development of steel industry. He said that the inventory of China main steel markets had increased and the inventory in the end of September was 93% higher than that in the early 2009, the steel price began dropping rapidly in mid August after the continuing rise from mid April to early August and by the last ten day of September, the price of both wire and deformed steel bars per ton has reduced by CNY 1,000 and nearly CNY 700 for medium plates.”
Mr Zhu Hongren said Ministry of Industry and Information Technology is researching and constituting instructions on encouraging and supporting steel enterprises acquisition and reorganization jointly with related departments, making great effort to promote the union and reorganization of steel enterprises and wash out inferior ones.
2. Promote structural adjustment firmly
Mr Zhu Hongren said "What the steel industry shall do next is to put more attention to promoting structural adjustment and industrial transformation and upgrade, and strictly controlling the excessively rapid increase of output and the disordered development of production capacity meanwhile, the step of structural adjustment shall be expedited in accordance with the instruction of industrial policies."
He said that steel industry shall increasingly improve its own inner quality, form industrial competence and take effective measures to promote a sound, persistent, stable and rapid development of the industry.
To enhance industrial concentration degree and expedite union and reorganization is an important approach to shaking off scrape for steel industry, which is also one of the important tasks for structural adjustment. Nowadays, the concentration degree of China's steel industry is extremely low. In accordance with the statistics from January to August, the total output of the top nine steel enterprises, the respective output of which has exceeded 10 million tonnes only takes up by 38.9% nationwide.
An insider told the reporter that the total output of the top four steel enterprises in US occupies 64.1% of the national output and 75% in Japan. The output of such three giants as Inner Mongolian Baotou Steel Union Co Ltd, Wuhan Iron and Steel Corp and Angang Steel Company Limited only accounts for 17.3% not far enough to guide and control the industrial trend at all."
Since last year domestic steel enterprises have expedited the step of reorganization such iron and steel groups as Hebei Iron & Steel Group and Shandong Iron and Steel Group have established successively. Driven by the related policies on steel enterprises acquisition and reorganization it is expected to quicken the course of acquisition and reorganization.
Several Suggestions issued not long ago stipulated that the government will attach great importance and give support to qualified large scale steel enterprises to develop such key products as million-kilowatt fire and nuclear power used extra thick plates and high pressure boiler tube, over 250,000 kilovolt ampere transformer-used oriented silicon steel with high magnetic induction and low iron loss and high-class tool steel.
The standard and design criterion for construction used steel shall be consummated as soon as possible, the hot-rolled ribbed bar, whose intensity is below 335 MPa, shall be eliminated expeditedly, the steel bar with the intensity of above 400 MPa shall be promoted and the upgrade and generation alteration of construction-used steel shall be boosted.
(Source from CE.cn)
