The reporter of "Economic Information Daily" learned that relevant departments in my country are studying the guidance for the development of the steel industry in the new stage. The guidance will be led by the National Development and Reform Commission, the Ministry of Industry and Information Technology and other departments, with the cooperation of relevant associations, and is expected to be issued as soon as the end of this year.

According to authoritative sources, on the one hand, the overall economic structure has been adjusted, and on the other hand, changes in crude steel production capacity have prompted changes in the contradiction between supply and demand in the industry. Therefore, it is urgent to study the future development direction of the steel industry under the new economic environment.

Zhang Zhixiang, president of the All-Union Metallurgical Chamber of Commerce, said that as the production capacity continues to be reduced by 30 million tons this year, the steel industry will complete the reduction of 0.1 billion -0.15 billion tons proposed in the previous "Steel Industry Adjustment and Upgrade Plan (2016-2020)" ahead of schedule. Capacity target.

Zhang Zhixiang said that the development environment faced by the iron and steel industry is not the same as that of three years ago. The level of supply and demand has changed from the serious surplus before to a relative balance. The operating efficiency of enterprises has changed from a small profit to a reasonable profit level. The industry has shifted from the stage of extricating itself from difficulties to the stage of high-quality development.

Since 2016, China's iron and steel has completed 65 million tons of production capacity in 2016 alone, followed by 55 million tons in 2017. At the same time, it has completely encircled and suppressed "strip steel" and directly removed 0.14 billion tons of production capacity. This means that if the target of 30 million tons is 2018 completed, the total capacity of the steel industry will reach nearly 0.3 billion tons.

"In the past two years, the crude steel production capacity has been reduced by more than 20%, and the capacity utilization rate has also increased from about 70% in 2015 to 80% in 2017, basically entering a reasonable range." Zhang Zhixiang said. Previous data from the Metallurgical Industry Planning and Research Institute showed that due to the domestic macroeconomic situation and the development of the main downstream steel industry was significantly better than expected, China's actual total steel consumption in 2017 was 0.725 billion tons, an increase of 7.7 year-on-year, compared with my country's crude steel output of 0.832 billion tons in the same year. The comparison is basically in balance.

However, it is worth noting that since 2018, the impulse of steel enterprises to expand production capacity has been obvious. According to data from the China Iron and Steel Association, the country produced 0.212 billion tons of crude steel in the first quarter of this year, an increase of 5.4 percent over the same period last year, with an average daily production of 2.3572 million tons of crude steel, the highest in the same period in history.

"We need to unswervingly resolve excess capacity, resolutely prevent the resurgence of 'strip steel', strictly prohibit new capacity, and implement capacity replacement." Liu Zhenjiang, secretary-general of the China Iron and Steel Association, said that in 2018, driven by profits, crude steel production grew too fast, which will increase downward pressure on the market.

It is understood that, in addition to consolidating the results of the production capacity, to leverage, to prevent capital risks; accelerate the merger and reorganization of steel enterprises, to further improve the concentration; scrap steel industry development, steel high-quality development and other aspects or the focus of the new version of the guidance.

"Relevant departments are further studying the way to promote enterprise merger and reorganization." Zhang Zhixiang said that the steel industry needs to increase resource integration, reduce and avoid homogeneous competition, promote corporate mergers and reorganizations, form a number of steel groups with larger production scales, and further increase industrial concentration.

Zhang Zhixiang said, for example, to support qualified enterprises to implement cross-regional and cross-ownership mergers and reorganizations, it is also possible to provide certain support in terms of financial policies and corporate land use.

Multi-measures to speed up the deleveraging of steel enterprises, to prevent capital risks is also an important aspect of the future. Zhang Zhixiang said that Xu Lejiang, vice chairman of the All-China Federation of Industry and Commerce, pointed out during a previous survey of the Chamber of Commerce that he closely followed the central government's deployment to prevent financial risks, actively reduced leverage and reduced the debt ratio of steel companies.

At the "Iron and Steel Industry Financial Work Symposium" held by the China Iron and Steel Association recently, Liu Zhenjiang also said that we are in a period of structural adjustment, and the production capacity structure has been significantly improved through the past production capacity, but other structural problems still need to be gradually resolved. One of the important points is the capital structure contradictions, high asset-liability ratio, resulting in a heavy financial burden.

Liu Zhenjiang said that the goal of the steel industry is to reduce the average asset-liability ratio to less than 60% after 3-5 years of hard work. Over the past year, steel companies have taken the initiative to deleverage, and the average asset-liability ratio of the steel industry has fallen by 2.59 percentage points year-on-year, but it is still at a relatively high level, reaching 67.23 percent.

"In 2017, the steel industry's interest expense alone reached 84.282 billion yuan," Liu Zhenjiang said. The financial cost of steel companies is relatively high, and the debt restructuring of long-term loans and short-term loans has not yet been completed. In terms of the average annualized cost of funds rate, it rose from 5.06 per cent in 2016 to 6.22 per cent in 2017, and the annualized cost of funds rate was raised to 7.22 per cent in March this year, well above the 4.35 per cent level of the bank's one-year lending rate.

Liu Zhenjiang said, will increase the level of debt disposal in the process of de-capacity, further coordinate the implementation of the signing of debt-to-equity swap program with banking institutions, promote cost reduction and efficiency, adjust investment strategies, increase the proportion of direct financing and other ways to leverage.

"Although the situation has changed, the main contradiction and development pressure of the steel industry still exist." Zhang Zhixiang said that there is still a gap between the current steel quality stability, uniformity and service performance, service life and actual demand and expectations, which cannot meet the higher demand for steel products in building a modern high-quality economic system.

In addition, Zhang Zhixiang pointed out that positioning the development direction of enterprises under the new situation, product structure, short-process steelmaking ratio, green and friendly development, information network technology applications and other issues also need to be discussed.