CN - China steel industry facing four challenges

Reading time: min

China steel industry will walk into a critical stage of transforming development pattern during 12th Five Year Plan period, with rapid growth of domestic steel production and expanded steel enterprises. In line with unknown opportunities and challenges awaiting for China steel mills, to adjust production and operation model is emerging as a tough question for China steel industry.

Mr Li Shijun chief analyst of China Iron and Steel Association gave a report on SteelHome 2012 Steel Market Seminar called “Four Challenges Facing China Steel Industry during 12th Five Year Plan” in which he contributed personal views and suggestions in response to current situation.

He holds that China steel industry will show signs of slow growth and poor profit, with four challenges awaiting.

I Slow demand growth
According to China Iron and Steel Association forecast in February, China crude steel apparent consumption will range from 670 million tonnes, 750 million tonnes and 850 million tonnes during 12th Five Year Plan period with correspondent annual consumption growth to be 2% to 7%.

China steel industry will truly get trapped into a dilemma of slow demand growth with the transformation of China economic development pattern.

Statistics from CISA in September show that China steel capacity under construction come to 55.04 million tonnes and the designed steelmaking capacity amount to 19.30 million tonnes, the planned capacity achieve 21.08 million tonnes and there are 6 million tonnes of capacity come to halt during calculation time.

The new additional crude steel capacity will climb to roughly 91 million tonnes given that the above projects will put into operation and there is no new ones come into our eyes.

China steel industry has to transform development mode, slow down speed and improve profit situation. Here are four principles for steel mills to adhere to
A). Enterprise scale
B). More values for customers
C). Low production cost
D). Keen insight and outstanding ability for opportunities.

II The challenge for upgrading steel industry

Two challenges
A). The upgrading in pipe line, shipbuilding and other downstream industries requires higher steel quality and related service
B). Technology upgrading in steel-consuming industry puts new demands for steel industry

Therefore, there are four strategies for steel enterprises to adopt.

1. Not only to exercise superior quality product strategy but also supreme design for high quality products. Now it is has been an era for steel mills to produce stably and economically, provide high value-added products and offer solution designs for customers.

2. To actively engage in key projects so as to keep pace with advanced technology.

3. To turn their own experience and technology advantages applied in prominent projects into standards for high quality or specialized products, thereby improving the threshold of production.

4. To enhance technology and facility strengths in producing quality products

III Environment protection constraints

Steel mills need to reasonably control steel production and guarantee sustainable development of steel industry.
Steelmakers need to realize low-sulphur and low-carbon production to foster environmentally protective craft and provide green products and service.

IV Homogeneity competition

In a bid to conquer this competition, steel mills need to find and obtain advantages in technology, regions, service, industrial chain and profession. To be specific

A). Steel mills need to form distinct technology advantage to build core competitiveness
B). To find out different demands in various regions
C). Customized and specialized solution for clients
D). To look for strategy of alienation in all links of industry chain
E). To put profession into D&R, standard and service

Sourced from