Large-scale mergers and acquisitions in China's steel industry will continue during the 14th five-year Plan period

The iron and steel industry is one of the most internationally competitive industries in China.During the epidemic period and under the normal control of the epidemic, the steel industry has become an anchor to ensure supply, stabilize employment and promote development.Under the background of "double cycle", how does the steel industry adapt to the new pattern?What new trends will appear in the steel industry during the 14th five-year Plan period?

The new development pattern of steel industry under the background of "double circulation"

China has the most complete and complete industrial system, and is the only country in the world that has all the industrial categories in the United Nations industrial Classification.It is this complete modern industrial system that enables China's industry to have the most complete supporting capacity, and also provides a strong driving force for the healthy and sustainable development of the iron and steel industry.

Gao Sheng, chief designer of metallurgical Industry Planning and Research Institute, believes that China's steel production has always been based on meeting the needs of domestic economic development and adhering to domestic recycling.

In 2019, China exported just 6.6 percent of its steel, the lowest among countries producing more than 20 million tons of crude steel, according to the data.From June to September, 2020, the net import of crude steel in one month appeared for four consecutive months.

Gao Sheng believes that under the background of "double cycle", the new pattern of steel industry is mainly reflected in the formation of a new balance of supply and demand at home and the expansion of new external demand market.

In 2019, China's per capita steel consumption reached a new high, and the domestic circulation basically stabilized.During the 14th five-year Plan period, the supply-side structural reform will still be the main line of the development of the steel industry.By adjusting policies appropriately and creating new demand, we will promote a higher-level and higher-quality balance between supply and demand.However, the potential demand space at the global consumer end is still large, and the international cycle will become the key content of China's steel industry in the next step. By competing with international capital, the overall competitiveness of China's steel industry will be further improved.

New trends of iron and steel industry development during the 14th five-year Plan period

Gao Sheng analysis that the "14th five" period, The development of China's steel industry will show the following trends.

First, the high growth pressure of supply capacity will continue, and even the pressure of severe oversupply in stages will continue.A number or even a large number of less competitive steel enterprises will be forced to exit the steel market, but the capacity will not disappear, but through restructuring and consolidation, and again into more efficient capacity.

"After more efficient production capacity replacement projects and technological upgrading projects are completed and put into operation, China's crude steel production capacity can even reach 1.2 to 1.3 billion tons per year."Gao Sheng believes that the high level of supply capacity growth has been supported by various factors, such as the high enthusiasm to undertake and build steel projects, the substantial improvement in the efficiency of the proposed projects under construction, and the production scale of steel enterprises through the improvement of capacity utilization.

Second, low cost and high quality as the core competitiveness of iron and steel enterprises will continue.Reducing cost and increasing efficiency of iron and steel enterprises is an eternal theme. "From steel to materials, from manufacturing to service, from China to the world, from a single enterprise to the ecosystem of the whole industrial chain" is an inevitable trend of the development of iron and steel enterprises.

Third, the industry will continue to be a large - scale merger and reorganization.Merger and reorganization is the event that has the greatest impact on the development pattern of the steel industry during the 13th Five-Year Plan period.Steel is a typical cyclical industry, and struggling companies need strategic investors to restructure to give them a new lease of life."14 five" period, the whole industry may fall into trouble again, will also usher in a new round of restructuring climax.

Fourth, the domestic steel process structure dynamic adjustment, the proportion of electric furnace steel gradually rise is an inevitable trend.With the further development of China's steel industry towards the peak area in the middle and late stage, the national policy of capacity replacement, environmental protection, land and finance is inclined, and the supporting conditions such as waste steel resources and electric power are gradually improved, and the proportion of electric furnace steel will gradually rise.

Gao Sheng expects that the development of electric furnace steel will go through three stages: first, the initial stage, the proportion of electric furnace steel will develop to 15%-20%;Second, the rapid growth stage, the proportion of electric furnace steel will be raised from 20% to about 30%;The third is the stage of slowly tending to balance, electric furnace steel constantly adapt to the market, resources, environment, technology, power and other conditions, and gradually reach a new balance.