Quality development is the mission for the Chinese steel industry even though there are many difficulties to conquer along the way, Shen Bin, chairman of China’s chairman of CISA China Iron and Steel Association (CISA), reiterated at CISA’s latest council meeting held on July 31 in Zhangjiagang, East China’s Jiangsu province.
Among the difficulties are the periodical or structural overcapacity in the steel industry, the little progress in mergers and acquisitions, the fierce competition in similar steel product structures, lack of investment in innovation, the instability in quality of medium- to high-end steel products, and the intensified environmental restrictions in steel production, he highlighted a few when presenting at the meeting.
To deal with these challenges, Shen suggested the Chinese steel mills to plan production according to the real needs by closely monitoring the market changes, to reduce operational costs including production by learning from those peers with advanced technology and high efficiency at home and abroad.
As for the Chinese authorities, it has intensified its surveillance and updated the guidelines on old-for-new steel capacity swaps to prevent illegitimate steel capacity expansion and reincarnation of the zombie capacities, Shen pointed out.
In the first half of 2020, China’s steel production appeared to have been affected little by the COVID-19, and the crude steel output grew 1.4% on year to 499 million tonnes, while demand, despite having recovered steadily in the second quarter, still posted a marginal on-year drop, according to Shen, without disclosing the exact percent.
Finished steel inventories, thus, had hovered high both at the steel producers and traders, or 70-125% higher on year, which had weighed on the domestic steel prices, Mysteel Global noted.
Mergers and restructuring of the steel mills are still of great significance and crucial even though the Chinese steel industry’s concentration has declined in the past few years, as a higher concentration level will help to stabilize the domestic steel market in the face of incidents such as the COVID-19
Meanwhile, securing raw materials supply, especially iron ore supply, at reasonable prices is also an important task for steel industry’s development, Shen elaborated. Otherwise, the whole industry will always face the abnormal phenomenon of high iron ore prices while low steel prices, according to him.
Over January-June, China’s top five steel mills produced 121.4 million tonnes of crude steel, or 24.3% of the country’s total, with the proportion down 1.26 percentage point on year, according to CISA’s survey.
In the coming years, the Chinese steel mills shall embrace the new infrastructure such as the 5G (fifth-generation) networks and data centers to promote intelligent manufacturing, and to adhere to the green or eco-friendly development by upgrading their environmental protection facilities for ultra-low emissions, according to the Shen, which was agreed by the attendees.
Progress has been made among the Chinese steel mills in adopting digital control systems, and as of 2018, about 68.7% of the key steelmaking and rolling processes had been numerically controlled, and over 50% of steel mills had resorted to e-commerce.
He Wenbo, secretary general of CISA, shared at the meeting that China Baowu Steel Group, Shagang Group, Nanjing Nangang Iron & Steel have been among the few to have run some of their mills via automation system, and they, thus, have been able to resume normal operational orders faster than the other peers due to their less reliance on human resources.
Baowu Guandong Shaoguan Iron & Steel, for example, has built up an integrated intelligent control station to monitor 18 work zones, saving 436 headcounts and reducing pig iron cost by Yuan 10-50/tonne (1.4-7.1/t), he elaborated.
In the longer term, the Chinese steel industry needs to inject more funding in scientific and technological innovation to enhance the overall competitiveness of China’s steel mills and to further optimize its value chain and supply chain on a global scale, Shen added.
China, as the world’s top steel production country, still needs to import around 10 million tonnes/year of steel, as around 20% of the imported steel products cannot be produced at home or matched in quality by domestic supplies, he highlighted.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel
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