China's steel industry may enter the era of high-end steel excess competition

China's steel industry is undergoing a quiet change, from the previous swarms of investment in low-end steel operations, to a more marginal market for high-end steel products. The Wuhan Iron and Steel Harbor Prevention Project and Baosteel Zhanjiang Project, which have been started in late May, have become the national high-end focus. Steel projects will inevitably set off the competition for the upcoming high-end steel market. China Steel Spot Network observers pointed out that if the country does not strictly control investment projects in new capacity, the next stage of China's high-end steel market will replay the old road of unordered competition.

After nearly 10 years of rapid development, China’s steel production capacity has already become the world’s largest producer of steel and steel. In 2011, China’s annual steel production capacity reached 685 million tons, and apparent steel consumption was 620 million tons. With the end of China's urbanization construction, especially when the real estate industry enters the mid-term adjustment phase, the demand for construction steel, carbon steel plates, etc., will also quickly fall. The low-end steels such as rebars and round bars that have been developed in the earlier period have been severely surplus; The low-end market is no longer competitive. This is a consensus reached by all steel workers. Therefore, they have the ability to actively enter the high-end steel market. Those who lack strength are only able to change jobs or tolerate it silently.

With the continuous development of economic development, the market demands for steel quality are constantly being upgraded. On the basis of meeting basic needs, the environmental protection requirements for steel products have risen to a higher level; since 2012, the housing construction industry, household appliances, Many steel fields such as automobiles and equipment manufacturing have introduced new industrial plans and clearly require the use of higher standards such as steel materials to ensure product quality, environmental protection, and energy conservation. With the improvement of the raw material quality requirements of the downstream industries, the use of low-end steel will inevitably be reduced step by step, while the energy-saving and environmentally-friendly high-end steel products will slowly become the main demand for raw materials.

At present, the prices of stainless steel, silicon steel, and automobile steel as high-end steel products are rapidly declining. Taking silicon steel as an example, as a high-end steel product, silicon steel, as more and more steel mills across the country increase their productivity and related inputs, the original Price of 9,000 yuan / ton of silicon steel, nowadays prices generally fell to 5,000 yuan, and ordinary hot-rolled steel prices are only a difference of 1,000 yuan; sharp decline in the price of high-end steel, is bound to enhance its market competitiveness, in the inexpensive Under the temptation, the future of high-end steel will further squeeze the ordinary hot-rolled steel market.

Analysts of China Steel Spot Network pointed out that with the rationalization of high-strength steel prices such as stainless steel and silicon steel, as well as the popularization of production technologies, future high-end steel fields will face more challenges; the main factor is the production of low-end steel products. A large number of steel mills, after facing the loss of market competitiveness of low-end steel products, are gradually eliminating production-technical R&D investment while eliminating a large number of steel mills with lower technological capabilities. It is only a matter of time before they take the opportunity to enter high-end steel production fields. This is the basis for the future survival of the steel industry. If it does not increase, it will only be able to face elimination. Under this pressure, the investment of the Chinese steel industry in the future may not drop or rise. The high-end production investment boom of steel mills has started.

In addition, as a high-energy-consuming industry, the amount of raw materials consumed by steel production is very large. However, as a non-renewable resource, iron ore has always been taken out. In order to ensure the sustainable development of society, the country has become non-renewable in recent years. The exploitation of resources to implement strict control policies, and how to allow limited resources to create more output value, has long been the key to industrial development; the maximization of resource utilization also requires that steel mills must abandon this current crude behavior, fine production. It is the future direction of development. This will inevitably force steel mills and Other production companies to upgrade production technology and maximize energy conservation. The production and use of high-end steel is undoubtedly one of the effective means to save energy.

In this series of industry processes that have started or are about to begin, the high-end steel market has already shown its advantages. 2 tons of high-end steel products are equivalent to the use of 3 tons or more ordinary steel products, and because high quality is reduced. The later maintenance costs make the use of high-strength steel products able to reduce the production costs of terminal enterprises; we believe that in the coming period, more and more terminal projects will be more willing to use high-end steel products, thus discarding expensive and high cost Amount of ordinary steel, high-end steel market will usher in a new opportunity for development, one at a time to break the current domestic high-end steel market mainly rely on imported embarrassing situation.

But at the same time, we have to worry about whether this new market has the old path of reversing the disorderly development of the Chinese steel industry decades ago, and eventually reverts to a serious excess of production capacity. Because there are a large number of steel mills in the new capacity investment, the construction of the situation there are unqualified to pass through, such as chaos after the first step, such as Shougang Qiangang project, as early as 2009 has been put into operation, but the Development and Reform Commission has only recently Through the review of its projects, more steel companies are the means to under-report and vote more. How the state can effectively circumvent this series of violations of the unified planning and layout is critical to the survival of the steel industry in the later period.