Steel deepening “de-capacity” requires “three-pronged approach”

After three years of unremitting supply-side structural reform, the steel industry has already completed the goal of resolving excess capacity during the 13th Five-Year Plan period, laying a solid foundation for the sustained and healthy development of China’s steel industry.

Cao Zhiqiang, the 13th National People’s Congress representative from Hunan Hualing Iron and Steel Group Co., Ltd. believes that with the industrialization of China, the basic completion of urbanization and the adjustment of economic structure, there will still be problems of overcapacity in the future. It is suggested to build a long-term mechanism to combat “strip steel”, strengthen the review and supervision of capacity replacement, and play a leading role in the government’s market regulation failure, and consolidate the hard-won de-capacity results.

The general manager of Hualing Xianggang said that the company’s products are used in many “super projects” at home and abroad, and the production lines are running at high speed. The Valin Iron and Steel Group achieved revenue of 120 billion yuan and profit of 7.5 billion yuan last year. In the view of “Hua Lingren”, all of this is due to the promotion of system and mechanism such as improving quality and efficiency, technological innovation and market development.

Cao Zhiqiang believes that it is the basis for China’s steel industry to move towards high-quality development by insisting on eliminating backward production capacity, strictly prohibiting new production capacity, strictly cracking down on “strip steel” and strictly regulating capacity replacement. To this end, three suggestions are proposed: first, to establish a long-term mechanism to combat “strip steel”; secondly, to strengthen the review of capacity replacement and special spot checks; in addition, to play the role of “tangible hand” to correct the “market failure”.

It is recommended that the relevant departments resolutely implement the “consolidation, enhancement, promotion and smooth flow” eight-character policy, further tighten the replacement ratio, eliminate the so-called “reduction of replacement” and carry out special inspections on steel capacity replacement; for environmentally sensitive areas and total steel production capacity In the areas controlled, it is recommended that the state set up a special capacity-to-capacity fund to resolve excess steel production capacity through state redemption, and effectively prevent excess capacity from being transferred to all parts of the country through capacity replacement policies to further enhance the international competitiveness of China’s steel industry.

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Post time: Mar-15-2019
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