How to cope with the severe industry situation

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There is still overcapacity, and the benefits of enterprises are polarized. As of the end of 2014, China's crude steel production capacity had reached 1.16 billion tons, still at a relatively high level. From the perspective of enterprise efficiency, the top 20 key large and medium-sized enterprises achieved an overall profit of 28 billion yuan, accounting for 92% of the total industry profit; There are 19 loss-making enterprises with a cumulative loss of 11.6 billion yuan, and the profit level of the enterprises is severely polarized.

The financial situation of the enterprise has not been effectively improved, and the issue of bank lending and expensive financing is prominent. In 2014, the asset liability ratio of key large and medium-sized steel enterprises was 68.3%, a year-on-year decrease of 0.8 percentage points, but it was 11 percentage points higher than the industry's best performing year in 2007. Affected by the strict control of overcapacity industries by the banking system and the credit scale of steel trading enterprises, banks have raised the loan interest rate of the steel industry. In 2014, the financial expenses of key large and medium-sized steel enterprises totaled 93.83 billion yuan, a year-on-year increase of 20.6%, which is more than three times the profits achieved by the enterprise. Some banks have resorted to large-scale loan withdrawals and pressure on enterprises, resulting in the suspension or even bankruptcy of some steel enterprises.

The industrial concentration ratio is reduced, and the homogeneous competition is further spread to high-end products. The efficiency of the steel industry is poor, and the willingness of enterprises to merge and restructure has decreased. In 2014, the top 10 crude steel production enterprises accounted for 36.6% of the total national production, a year-on-year decrease of 2.8 percentage points. Large steel enterprises' high-quality plate projects are mostly high-end products such as automotive panels and electrical steel, and there have been signs of surplus. The market pressure for low grade oriented electrical steel, non oriented electrical steel, and ordinary quality automotive panels is further increasing, and the competition for homogenization of high-end products is becoming increasingly fierce.

The significant increase in export products has exacerbated trade frictions and conflicts. In 2014, China's steel exports accounted for 32.2% of the global steel trade volume, reaching a historic high. Among them, the cumulative export of boron containing steel in the first 11 months was 39.76 million tons, accounting for about 47.5% of the current period. Many countries have taken trade protection measures against China's steel products. In 2014, there were 40 investigations of trade remedy measures initiated by foreign countries against China's steel enterprises, and in addition to the original developed countries in Europe and America, the scope of the investigations has gradually expanded to include developing countries in Asia, Africa, and Latin America.

The phenomenon of ground strip steel and ticket free sales disrupts the steel market, and fair market competition urgently needs to be addressed. Affected by the industry downturn, some small and medium-sized enterprises have taken illegal means such as bar steel production and ticket sales to obtain market share and profits, which has seriously disrupted the fair market competition environment, not only squeezed the market space for formal enterprises, but also provided Lebensraum for backward production capacity, which is not conducive to the healthy development of the industry.