Will the new steel policy be used to alienate steel industry behavior?

The industry's alarm bells of overcapacity and slumping profits are constantly going on – this is a cautious task for Chinese steel companies that should have made the country's strong macro-control, especially in the case of expected profit and loss, it is obviously not wise to expand production.

However, when everyone advocates shrinking the position of the steel industry, the news of the first line of the company has frequently spread to the market. The news from Tang Gang recently said that as of the end of 2005, Tangshan Steel achieved the goal of increasing production. The output exceeded 10 million tons; Laiwu Steel, Jinan Iron and Steel Group, Jiangsu Shagang and other steel companies have announced that they will complete the “increasing production sprint” at the end of 2005 and reach the goal of 10 million tons. Enterprises such as Maanshan Iron and Steel Co., Ltd., which have not yet reached the standard, have also raised the target of exceeding 10 million tons in 2006.

Compared with the expansion of such companies, it is the official and academic concerns about the prospects of the steel industry. It is an indisputable fact that the production capacity of the Chinese steel market is obviously overcapacity. And now it has maintained a growth of more than 30% in the huge base. Even in 2005, with strong interventions, steel production reached 349 million tons, an increase of 24.6% year-on-year, an increase of nearly 70 million tons of crude steel, which is equivalent to the world's number one steel company across Europe, Asia and the Americas. The total annual production of Mittal. China's steel production has accounted for 30% of the world's steel production, and more than the sum of the second, third and fourth.

Although the steel industry has been at the forefront of industries subject to strict investment restrictions in the macro-control policies for several consecutive years, the Chinese steel industry still has obvious market-driven characteristics, and its growth in 2006 will reach more than 10%. According to this calculation, China's steel output will increase by about 40 million tons in 2006, and the total output will be close to 400 million.

In contrast, the industry's profit in 2006 was half that of 2005. Some analysts believe that the industry's profit in 2006 was only 10 billion to 20 billion. Excess production capacity is consuming the world's iron ore and the profits of Chinese steel mills. According to the Steel Association, in 2005, the sales revenue of 66 large and medium-sized steel companies in China increased by 16% year-on-year, while profits fell by 11%. In November 2005, there were 14 book loss companies in the month, and {HotTag} lost 20%.

In such a situation, the larger the scale, the lower the profit, the iron and steel enterprises are risking huge losses, and the reason for choosing to reverse the market expansion. What is the reason? Some smart industry people have revealed the mystery: According to the steel industry policy The spirit of steel companies only reach 10 million tons, and will not be swallowed up in the future. Under this guidance, there may be more steel companies in 2006 that will struggle around the “10 million tons target”.

The elimination of outdated production capacity is a strong drug for the industry to stop losses. The relevant experts are also optimistic that in 2006, in the case of the implementation of the plan to eliminate backward production capacity, the profit of the whole industry will remain 50 billion to 60 billion yuan. The National Development and Reform Commission has also formulated the Catalogue of Industrial Structure Adjustment. According to this requirement, China will eliminate 100 million tons of excess steel capacity in 2007.

However, steel companies have not consciously reduced production capacity. After the new steel industry policy in 2005 put forward the "limited small support", the wind of expansion was immediately swept across the north and south. In this "expansion storm", in October 2005, 50 key large and medium-sized steel companies jointly announced that the goal of reducing production by at least 5% in the fourth quarter became a smattering.

The reason why such a strange phenomenon occurs is because on the one hand, big enterprises are worried that the reduction of production will repeat the mistakes made in 1998, so that small-scale private enterprises will take the opportunity to grow up. Therefore, a number of small and medium-sized enterprises will be killed by expanding production, and on the other hand, in order to avoid being eliminated, At this time, we also tried our best to fight for the goal of tens of millions of capacity.

It can be seen that although the main purpose of the new steel policy is good, the simple underline of the quantitative indicators has caused the enterprises to adopt the method of “having policies and countermeasures” in the actual operation to ensure that the current stage is “Mr. The strategic goal of development has been achieved. That is to say, although every enterprise knows that the production capacity is already over-capacity, the market has already exceeded supply, but it is still desperately investing and desperately expanding its production capacity. The metaphor of an image is that every business wants to do not run the fastest, but run faster than others, so that he can be the last survivor.

Therefore, after the introduction of the new steel policy, the decision-making body must consider the implementation method in a solid and effective way. Otherwise, the steel production capacity generated by the simple quantitative indexing is not necessarily the capacity that the market really needs, and this will also alienate the industrial behavior of the steel enterprise. Finally, it will affect the benign development of the industry.

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