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The temptation to yield profitable under: steel mills resume production and demolition furnace race

REVIEW: while China Aluzinc Steel Sheet Coil production complex cases while the furnace demolition, almost throughout Hebei Province. My steel net data show that from August to November this year, Hebei to remove the iron production capacity of 16.47 million tons, the production capacity is 11.8 million tons there, and good profitability. According to the survey of relevant state departments, state-owned enterprises better than a lot of private profit, and environmental protection, management and employees of social security and other related costs not in place.
Tangshan Iron and Steel powerhouse steel companies "on schedule" to resume production.
September 2, reporters visit a Tangshan Steel, the door of the parking lot full of all types of vehicles, plant chimneys billowing also "white smoke." Local people familiar discontinued last year after a steel indeed been partially resume production.
This mill is located in Qian'an Town of wood factory, in January this year when visiting reporter, a whole other way, the huge empty parking lot, behind the plant also silent.
Although part of the resumption of production, a steel and nearly 40 other Hebei steel mills, iron and steel smelting need to dismantle dozens of blast furnace and converter in the next three months (September-November). Hebei Development and Reform Commission in accordance with the requirements of this October Songting mills need to remove 450 cubic meters a steelmaking furnace, involving 520,000 tons of production capacity.
And this while steel production complex cases while the furnace demolition, almost throughout Hebei Province. According to the Thai agency securities are calculated according to just released to production in Hebei Province, the overall objective of this year, from August to November, Hebei to remove the iron production capacity of 16.47 million tons, the production capacity is 11.8 million tons there, and good profitability .
National Bureau of Statistics data show that from January to July the national ferrous metal smelting and rolling processing (steel) of the total profit of 83.88 billion yuan, profits accounted for the main business income ratio was 2.3%, and last year, seven months before the obvious contrast, when profit a total of 39.15 billion yuan, accounting for only 1% of the main business income.
According to the reporter, higher profits many private steel companies, a ton of hot-rolled coil current profit can reach four hundred dollars, and some even more. Even so, annual output of 500 tons factory, profit of close to 1.5 billion.
According to this year Yajian crude steel production capacity of around 45 million tons planned, the remaining five months to get rid of 53% of excess production capacity in the steel industry profits warming trend, steel companies will reluctantly "broken wrist."
Iron and steel industry experts pointed out that profitability has been removed and are being produced by the furnace is cruel. Private self-financing, there is no state subsidies placement of workers, especially in the current low stock traders steel case off the stove, the more the higher steel prices, companies they want to produce.
Agency survey data show that the current round has a production capacity of iron and steel enterprises with Yajian task 140, which private enterprises accounted for 88.6% covered by iron and steel production capacity was 26.2 million tons and 55.59 million tons respectively, accounting 70.9% and 80.2%.
"Or go back to the market by adjusting the capacity of the road up, in particular, to more comprehensive measures to strengthen environmental protection, social security and other iron and steel industry to govern." Steel industry experts said.
Limited resumption of production
21st Century Business Herald reporter learned in the Tangshan area, a large number of iron and steel enterprises have gradually resume production. Songting with annual output of 500 tons of steel, for example, we are producing a new plant, but the old plant has not resumed.
According to the reporter, a steel plant a total of six two old stove, so far there are at least two in overhaul. According to local sources, the new plant put into operation a few years, after the last year to shut down production capacity in the background, this year to resume production yield is not high, to be sure, the resumption of production is less than half of the past. "Now the factory employs only about 500 people, only two or three months to resume production, did not recover." An insider said.
A steel plant with an annual output capacity of Shanxi Haixin Iron and Steel belong to the same level. Jianlong Group after the acquisition, has been renamed this year, Shanxi Haixin Shanxi Jianlong, local media said, Shanxi Jianlong April 30 as scheduled resumption of production of ignition, June 10 across the board through the main process line, annual output of 1.6 million tons Gifts building materials market smoothly. According to Securities Daily reported, in July, Shanxi Jianlong sales revenue of 290 million yuan, profit 20.62 million yuan.
Shanxi is a typical example of Jianlong steel enterprises resume production. In fact Tangshan gradually resume production of many enterprises, such as a company in Tangshan, about last October shut down in January this year has resumed. Another steel prices is the resumption of production nearly three months. There is a steel prices began production in August, newly hatched soon molten steel.
Not all mills have complex production luck. For example, some steel enterprises in Tangshan Yutian would have no news of resumption of production. In addition there are a number of steel mills in Tangshan region blast furnace maintenance phase. Even if resume production companies, it is only part of the blast furnace recovery.
Analysts noted that not these mills do not want to resume production, mainly money. Because a stove ignition need tens of millions of funds, and now the steel from the bank loan is not easy. "Some companies can recover some of the furnace, has been very good." The analyst said.
Earlier media reports said, in November last year because of a steel enterprises are electricity arrears power companies wind up, and finally had to stop. Although the end of April this year, re-ignition of the outgoing message, but has sapped the original thousands of companies are now only a few hundred people.
However, overall, most of the national steel mills in Tangshan steel production recovery pace is accelerating. Agency data show September 8, the day of the blast furnace in Tangshan Iron and Steel plant operating rate was 92.9%, well above the 80% January and February levels.
We understand that both the current production, or iron ore imports have accelerated growth. Such as iron ore, for example, from January to August, China imported 670 million tons of iron ore, an increase of 9.3%. Annualized, the annual imports to reach 10 million tons, compared to 2000, one year before the level of iron ore imports about 100 million tons, an increase of approximately 15 years, 10 times the amount of imports.
General manager of Shandong Watson Ltd. Lu Zhaohui told reporters, could not be blinded to speed up the import of iron ore, not a substantial increase in demand for steel. This is because foreign ore prices lower, with China increasingly international low-cost ore, the proportion of Chinese imports of iron ore in the past forty or fifty per cent now to ninety eight percent. The actual crude steel demand is unlikely to increase significantly, last year was 804 million tons, this year may be 8.1 million tons.
Furnace demolition subsidies undecided
However, despite the large number of enterprises in gradually resume production, demolition furnace shutdown instruction sword of Damocles, allow enterprises difficult to follow.
According to 21st Century Business Herald reporter, currently Hebei region needs in the last four months of the removal of the furnace, most of them in production status. There are many companies just to resume production soon, or has not been shut down, also need to be removed stove.
For example, according to figures released by the NDRC Hebei, Tangshan booming company in September to dismantle a 450 m3 blast furnace, involving 520,000 tons iron production capacity. Jiujiang Wire Company in October also demolished a 480 m3 blast furnace ironmaking involving 540,000 tons of production capacity, in addition to involving 700,000 tons of converter steel need to be removed.
RXPE also need to remove the converter 700,000 tons annual production capacity of 1 October. 318 companies in October to dismantle a 450,580 cubic meters of blast furnace each one, involving 1.14 million tons of production capacity. The company also need to remove a steel converter, involving an annual steel production capacity of 750,000 tons. Yanshan Company in October were needed dismantle two 450 m3 blast furnace, involving a total of 1.04 million tons of production capacity.
We understand that the company is booming last year shut down and then re-production, and Jiujiang Wire, RXPE and Yanshan Company has not been discontinued. Now 318 companies and Yanshan Company in addition to a small amount of normal maintenance shutdown of the furnace, the rest are at full capacity. Consider October deadline is approaching, how do these companies, many steel companies say bad answer.
Qian'an area a steel company told reporters, although the plant a lot of orders, the situation in the first half of next year are very optimistic, but mills where he will face demolition furnace unknown. "I do not know how to deal with the last, and now companies are profitable." He said.
21st Century Business Herald reporter was informed, this Tangshan, Hebei Development and Reform Commission requires companies to dismantle the stove, the majority belonging to a lower order of magnitude, such as a blast furnace in September Tangshan Bainite Steel (Group) Company to be dismantled to 600 m3 involving iron production capacity of 650,000 tons, the rest are based at 450 cubic meters of blast furnace, blast furnace shutdown of many of these. In the past 2012, Xinda, Jiujiang Wire, Hidenobu, Songting new production of more than 1000 cubic meters of blast furnace, as well as the Yanshan Iron and Steel more than 2000 cubic meters of blast furnace, are not included in the column were removed.
For removal of blast furnace requirements of iron and steel enterprises have said that when more specific look at how to do. Iron and steel business people on the list, most of them choose to remain silent or did not answer. Insiders pointed out that now is not on the list of manufacturers for production. "If the initiative is discontinued, the removal of their own capacity, to less than a penny, if the government is forced to stop production requirements, there is the possibility of bargaining." A source told reporters.
Reporters in Xinglong Company and Aetna see that these companies produce are more busy. The company is located in the town of hazelnut booming like Luan County, State Road 102 is the entrance, surrounded by a lot of size steel plants, national highway between a truck and then a heavy, iron ore and some covered with canvas, pulled some bare steel .
The resumption of production companies or production companies how to remove the blast furnace, is a problem. My steel net data show that from August to November to be removed Hebei iron production capacity of 16.47 million tons, the production capacity is 11.8 million tons there, accounting for about Qi Cheng. Another involves 14.75 million tons of steel production capacity to be removed, as most of the production.
Liu Bin Manager ordinary steel steel mesh portion I believe, from the current situation, the steel companies are generally profitable, despite the current iron ore and coke prices on the rise, but steel billet earn 100 yuan one ton, a ton of steel making 200 yuan, a ton of hot rolled earn 400 yuan. The question now is shut down in different parts of different policies, Tangshan area have heard of no subsidy, to see how to implement the policy.
Boundary Market and the Role of Government
Until after mid-September, the State Council will send inspection teams to 15 Road, 10 Road, which is the second State Council inspection team once again went capacity Thunder action to advance the work around the post.
Since 2005 the country's crude steel production exceeded 350 million tons, 800 million tons in 2014 to more than a year in the elimination of backward production capacity, crude steel production has increased each year.
Analysts told reporters, the state vigorously to remove capacity, need to focus on the fact that the possible follow-up a few months coil prices will not decline, if removed too fast, it may result in short supply. Because steel mills and traders little inventory, "cold-rolled sheet may occur out of stock, because now the South home appliances and automobiles in great demand." The analyst said.
National Bureau of Statistics data show that in July the national automobile production rose 25.4 percent to 1.978 million. January-July vehicle production was 15.078 million, an increase of 8.1%. 21st Century Business Herald reporter was informed, cold rolled or hot-rolled sheet is mainly used in automobiles and home appliances. September 8 Tangshan building material production line operating rate of less than 40%, much lower than the profiles, steel operating rates, low start building materials, reflecting the current real estate demand is not high.
However, the industry view, the level of which the industry operating rate may not mean much.
Iron and steel industry veterans point out that the steel industry is not too excessive, which should start, the market have the final say. Currently blast furnace operating rate of innovation is high, even if the government dismantled more stoves, but production can not be reduced because there are profit-driven. For example, a car load of 20 tons, could pull 22 tons. As a result, steel production can be reduced, but production has not declined.
China Steel is currently operating rate differential with foreign similar, with administrative measures to control steel production capacity, the significance is not great, the most important thing is to rely on the market. The government should increase the intensity of environmental management, in addition to increase corporate restructuring efforts, and to consider the logistics market environment.
"For example, now small traders and steel inventories, steel products directly face the market, enterprises to speed up the production are in demand at the same time increase the reorganization, and enhance industrial concentration, a lot of pollution can be heavy, environmental non-compliance of small enterprises to eliminate , such as Baosteel and Wuhan Iron and steel merger, Shougang steel merger and river, north and south two companies were producing 100 million tons, the large control on the market, and now so many small businesses have a business license, not to shut down production profitability. "industry veteran said.
This year to focus on promoting the production capacity, as of the end of July steel production capacity to resolve tasks completed only 47%. The State Council inspection team also found 10-way place to slow production, and not a lot of reform in place, such as the Deputy Minister of Industry and the State Council, led Xin Guobin second inspection teams, this August 25 - September 1 in Hebei, Fujian, Jiangxi, Henan and other provinces inspection found that the current four provinces to resolve the overcapacity slow progress of work to varying degrees, have not yet reached the task schedule and time schedule synchronization requirements, the allocation of funds not yet fully in place, the larger the placement of workers, disposal of debt difficulty .
Reporter survey found, for example, to being produced RXPE example, a four-year work in the factory workers told reporters, as well as four monthly wage of about more than 10,000 yuan unknown. In addition there are companies that did not pay social security payment, resulting in employee social security pay off for years, affecting the normal retirement. There is also a reflection of the families of employees of enterprises, workers until his death, which is still not received their wages 20,000 yuan.
More than once in those steel mills to work, he told reporters that the case of a number of enterprises in arrears of wages, has not yet been resolved. According to the survey of relevant state departments, state-owned enterprises better than a lot of private profit, and environmental protection, management and employees of social security and other related costs not in place.
State Administration of Work Safety in June tissue sampling team found a number of steel enterprises in Hebei presence of molten metal lifting gantry cranes were using fixed hooks and other security issues in accordance with relevant provisions of the proposed law shall be ordered to immediately stop production for rectification, organized by the local government authorities before the resumption of production after acceptance. However, these mills were not so far seem to have much impact.
Data show that 1--6 months, Hebei crude steel, steel products, pig iron production increased 3.15,4.04,4.34 percentage points higher than the national. Year, Hebei's steel industry profits rose 69.05 percent.
Behind these high-profit growth may be that many costs are not in place, the market and the government did not effectively play the role results.

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