Steel industry will be fully dissolve excess capacity

On December 11, Beijing skies, concluded the annual central economic work conference. Conference pointed out that in 2015, relying on promoting the reform, restructuring, mass transfer efficiency upgrading perseverance to promote economic development, strive to do not because of speed and amount of quality better.

So I need the reason for this is that environmental carrying capacity has reached or close to the limit, must promote green low carbon cycle development new way; To comprehensively resolve excess capacity, also play a role of market mechanism to explore the future direction of industrial development.

The decision means that New Year excess industry will continue to the pace of production capacity, price and production is difficult to have a big rebound.

Since this year, including coal, iron and steel industry downturn, the coal production and consumption, are a rare negative growth. The first 10 months, coal mining and washing industry fell by 45.2%,

Industry researcher at the Chinese academy of social sciences Zhou Weifu pointed out that economic growth in 2015 is expected to continue to slow down, so that industrial growth, especially heavy industry growth is difficult to accelerate surplus industry.

In the New Year there will be no macroeconomic regulation and control, which means that more like 2014, 2015 the implementation of market regulation to excess industry.

He predicts that China will complete industrialization in recent years, some of the excess production capacity is expected to peak industry field. “In 2015, some energy and raw materials industry demand will remain weak, difficult to have a big growth.” He said.

According to the national bureau of statistics, the first 10 months of this year, the industrial growth of 8.4%, it is low for many years. Some of the excess of industry growth is low, production also presents a depressed state.

October 1 – for instance, cement, plate glass, pig iron, crude steel, ten kinds of non-ferrous metals, aluminum oxide production, respectively increased by 2.5%, 3.5%, 0.1%, 2.1%, 0.1% and 6.6%.

Overcapacity will comprehensively resolve capacity

In 2015, according to the central economic work conference spirit, to carefully plan with good China’s huge economic resilience, potential and room for manoeuvre, rely on promoting the reform, restructuring, perseverance to promote economic development quality, and the efficiency upgrading, strive to do not because of speed and amount of quality better.

In particular, to comprehensively resolve excess capacity, also play a role of market mechanisms to explore industry development direction in the future. Reason for this is that at present China’s environmental carrying capacity has reached or close to the limit, must promote new ways of green low carbon cycle development.

China’s surplus contoured industry in 10 years ago. According to the national development and reform commission (NDRC), 10 years ago, iron and steel, electrolytic aluminum, ferroalloy, coke, calcium carbide, automobile, copper smelting industry overcapacity problem is outstanding, cement, electric power, coal, textile industry also exists the problem of excess production capacity.

In 2013 the state council on resolving contradictions of severe overcapacity guidance “(guo fa [2013] no. 41), steel, aluminium, flat glass, such as serious excess of the ship.

At the end of 2012, China’s iron and steel, cement, electrolytic aluminium, flat glass, shipping capacity utilization rate is only 72%, 73.7% and 72% respectively, 73.1% and 75%, significantly lower than the international usual. Iron and steel, electrolytic aluminum, shipbuilding and other industries profit fell sharply, common management difficult.

Great changes have taken place in this year’s situation, however, it is influenced by the market demand this year, a significant slowdown in excess industry production, end product prices fell heavily, percentage of loss-incurring enterprises is bigger also. The overcapacity situation, relying on market-oriented means regulation in 2015 is expected to continue, this makes to excess industry capacity will continue to accelerate.

In iron and steel industry, for example, the iron and steel production capacity in four or five tons, regulation, the result now there are about more than 1 billion tons. But now may peak capacity is coming.

Agency chief adviser Ma Zhongpu tells a reporter, because of the economic growth is slowing, starting from the fourth quarter of last year, steel market prices have been close to the bottom. This will force steel manufacturers, production, in order to maintain the balance of supply and demand.

In the case of economic growth continues to slow down, the domestic steel demand will fall next year. May yield peak in two or three years to come. Slightly better “the iron and steel industry profit, not on steel prices, but the iron ore raw materials prices lower.” He said.

And this kind of regulation is different from the past, such as hebei moving part of the enterprise. So in the process of relocation, because steel mills within two or three years can’t form the production capacity, production will decline. But in the process of relocation, there are many variables. If the company found no profit, may use government subsidies of the move to invest in other industries.

Market and promote industrial upgrading

In 2015 to the country’s excess industry regulation, may still depend mainly on market, it is different from the past by administrative means to control the.

After 2009 countries approved the 10 million tons of fangchenggang project, but because of excess market factors, has not been put into production.

According to the spirit of the central economic work conference, in 2015 China from resource allocation model and the way of macroeconomic regulation and control, comprehensive stimulus diminishing marginal effect is obvious, to comprehensively resolve excess capacity, also play a role of market mechanism to explore the future direction of industrial development, must fully grasp the total supply and demand change, new macroscopical adjusting control science.

To form these changes trend shows that China’s economy is more advanced, the stage of evolution of division of labor is more complex, the structure more reasonable, economic development into the new normal, from rapid growth to the rapid growth, the pattern of economic development is from the scale type speed type to quality efficiency of extensive growth and intensive growth, economic structure are mainly from incremental capacity to adjust the stock, and optimize the depth of the incremental coexist adjustment, economic development is from traditional growth point to new sources of growth. To know the new normal, to adapt to the new normal, leading the new normal, China’s economic development is the current and future a period of great logic.

Industry researcher at the Chinese academy of social sciences Zhou Weifu pointed out that the future state is mainly for excess industry environmental protection, examination and approval and other control ways in the past, is no longer the main form, industry capacity depend mainly on market demand and price regulation.

The benefits is that the role of the market more effectively. “In the past a lot of places of excess enterprise so loss of production, and also because of policy incentives and subsidies. Even if countries don’t batch, place also can produce, but now new rights have been down.” He said.

According to the national development and reform commission, the new investment this year directory, including steel, and other fields, the country is no longer the project examination and approval, but to the place. This includes the coal industry, etc. The industry profits is not high. Bureau of statistics figures show, for example, October 1 – a 45.2% drop in coal mining and washing industry, ferrous metal smelting and rolling processing industry (steel) grew 6.9%, non-ferrous metal smelting and rolling processing industry growth rate of 8.8%.

The national federation of industry and environmental chamber of commerce secretary jian-hua luo tells a reporter, looked from the present situation, a lot of excess industry prices are low, and the national intensify structural adjustment. The coal industry, for example, because the country with more hydropower, as well as the heavy industry development is slow, which makes the coal demand.

“Next economic if continue to slow down, the coal demand is still very low, but whether the consumption has come, may still need to study, such as water and electricity is not abundant, coal demand is likely to increase.” He said.

Digital display of the Chinese coal industry association, China’s coal consumption is about 1 – September 3.07 billion tons, fell about 51 million tons, down 1.6%. According to the national energy administration, 1-3.7% of China’s heavy industrial electricity consumption growth in October this year, below the light electricity 4.3% growth.

From power generation, and October 1 – hydroelectric power installed capacity of 257 million kilowatts, up 9.4% from a year earlier, the thermal power of 890 million kw, growth of 5.3%, 21.7% less than 21.7% of the nuclear power, wind power.