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Iron & steel industry hastening restructuring pace
Last Updated(Beijing Time):2008-01-08 10:14

By Su Min

Shandong Laigang Group is located in the foothill of the mountainous area of Middle Shandong province, a typically seasonal water-deficient area in North China. Several years ago, an expert affirmed that this area could only support a steel enterprise with the production scale of a little more than 2 million tons due to the inadequate water resource. However, in recent interview, our journalist learned that Laigang's steel output had realized a leap from 2 million tons to 10 million tons from the beginning of the Tenth Five-Year-Plan period, and its total water consumption only equaled to that in 1995, when the steel output was only 1.12 million tons. In 2005, water consumption per ton steel has been decreased to 3.5 tons, taking the lead in China and approaching the advanced level in the world. This year, Laigang Group got a new level in main technique equipments by eliminating old ones. Till the end of October of this year, it eliminated two large-scale coke ovens, three electric ovens, four 120-cubic-meter blast furnaces. It's estimated by experts that if the fresh water consumption of all steel enterprises nationwide can obtain Laigang's standard, we can save over 2 billion liters of fresh water per year, more than the water storage of Gezhouba.

This year, the iron and steel industry implemented earnestly the industry policies of the state, hastened the steps in restructuring, independent innovation, energy conservation and emission reduction, and made great efforts to realize the strategic shift from scale expansion oriented to quality and efficiency, therefore, new progresses have been made in the development of speed, quality and efficiency.

Over the past several years, China's iron and steel industry has not only met the demands of national economy and development for steel products, but also blazed a scientific development path of optimal structure and adjusted development mode, hastening the progress from a big steel country to a steel power.

According to statistics, China's iron and steel production has kept a rapid development speed since this year, but grown much more slowly. From January to September, the aggregate steel output nationwide reached 362.73 million tons, 54.29 million tons more than the same period of the last year and increased 17.6 percent. The increase range decreased by 0.8 percent comparing to that of the same period of the last year, 0.9 percent decreased from that of the end of 2006. Pig iron output reached 346.38 million tons, 15.7 percent increased, with a reduction of 5.1 percent in increase range year on year. Steel output got 417.54 million tons, 24 percent increased, with a reduction of 0.5 percent in increase range comparing to that of the end of 2006. From January to September, the increase range of raw steel, pig iron and steel dropped slowly as a whole.

Luo Bingsheng, Executive Vice President of China Iron & Steel Association, believes that a great deal of newly added resources will flow back to domestic market in several months due to the continuous effect of macroeconomic adjustment and control measures. Along with the tremendous productivity emission, great pressure will be put on the domestic iron and steel market.
Since the beginning of this year, the increase in industrial investment has kept a low speed, while the benefit is still growing. From January to September, the investment is accumulated to 174.1 billion RMB Yuan, 13 percent higher than that of the same period of last year. From January to August, the total sales income of all iron and steel enterprises reached 2205.7 billion RMB Yuan, 38 percent higher than that of the same period of last year, and realized a profit of 124.5 billion RMB Yuan, growing 58.9 percent.

Since the beginning of this year, we made many new achievements in the energy conservation and emission reduction throughout the industry. In the first 8 months, the comprehensive energy consumption per ton of steel production of all key large-and-medium-scale iron and steel enterprises reached 626.55 kilogram standard coal equivalent, 2.88 percent lower than that of the same period of the last year. The comparable energy consumption per ton of steel production reached 609.61 kilogram standard coal equivalent with 2.25 percent lower than that of the same period of the last year. Fresh water consumption per ton steel reached 5.69 tons, 16.37 percent decreased. Total sewage water drainage decreased by 9.89 percent, smoke dust decreased by 3.92 percent, and industrial dust decreased by 3.11 percent. The National Development and Reform Committee predicted that the output of raw steel this year would get 490 million tons, 16 percent higher than that of the same period of the last year. Steel export will reach more than 60 million tons, growing 50 percent or so.

Jia Yinsong, Deputy Director-general of the Economic Operations Bureau of the National Development and Reform Committee, said that the overall iron and steel industry operated well at present. Production is balanced with sales, and profit grows highly. But it's noticeable that the large export volume of iron and steel products concealed the contradiction of supply succeeding demands in productivity for the present, and made this industry unable to eliminating laggard productivity. It is known that at the present, laggard productivity accounts for 20 percent of the whole productivity of the industry, so it will be a hard task to eliminate laggard productivity.

Jia Yinsong called for the quicker elimination of laggard productivity. On the one hand, eliminating laggard productivity should be put into effect according to the industrial policies, combining the elimination with the energy conservation and emission reduction, so as to drive the outdated productivity out of the market and reduce the energy consumption and pollution emission, and advance the progress of energy conservation and emission reduction. On the other hand, policies and relevant measures should be perfected to hasten the establishment of the retreat system for laggard productivity. In the meantime, we should insist on the guideline that the development of iron and steel industry should meet domestic demands, lessening the dependence of iron and steel products on international market. Continuous efforts should be made to control the export of iron, steel and other primary products to form a market pressure to eliminate laggard productivity. Enterprises should also optimize their export structure and region structure of products, avoiding exporting many ordinary products to the same region or country that may lead to trade conflicts.

The low industrial concentration is the Achilles'heel for China's iron and steel industry. Since the launch of Development Policy for the Iron and Steel Industry in 2005, the restructuring steps of iron and steel enterprises are fastening notably. Recently, relevant state authorities emphasized again that we should support the strategic guideline of large-scale iron and steel enterprises'development towards group, and further advance the integration and restructure among different regions, provinces, cities, and different ownership systems.

Regarding to the industry trend in 2008, Jia Yinsong analyzes that the overall productivity of steel industry will continue to be expanded in terms of supply, the contradiction of supply succeeding demands won't be solved essentially; in terms of demands, the weakening of export and the refluence of steel will be great pressure for the formulation of domestic market; in terms of cost, price of iron ore and other energy sources, international ocean shipping fee, environmental and human resource cost are all rising, thus the steel industry is entering a high-cost era. 
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