Industry News
Jiahe October 3, 2019

Some Problems Currently Facing the Steel Industry

Core tips: At present, the steel industry is facing some unavoidable problems, such as overcapacity and reduced industrial concentration. So let's explain in detail some of the problems facing the steel industry.

Problems facing the industry:

(1) Production capacity is still surplus, and corporate profits are polarized. As of the end of 2014, China's crude steel production capacity has reached 1.16 billion tons, which is still at a relatively high level. From the perspective of corporate efficiency, the top 20 key large and medium-sized enterprises achieved profits of 28 billion yuan in total, accounting for 92% of the industry's total profits; 19 loss-making companies have accumulated losses of 11.6 billion yuan. The level of corporate profitability is highly polarized.

(2) The financial situation of the enterprise has not been effectively improved, and the problem of expensive bank loans and financing is prominent. In 2014, the asset-liability ratio of key large and medium-sized iron and steel enterprises was 68.3%, a decrease of 0.8 percentage points year-on-year, but it was 11 percentage points higher than that of 2007, where the industry's efficiency was the best. Affected by the strict control of overcapacity industries by the banking system and the credit scale of steel trading enterprises, the bank increased the loan interest rate of the steel industry. In 2014, the financial expenses of key large and medium-sized steel enterprises totaled 93.83 billion yuan, a year-on-year increase of 20.6%, which was three times the company's realized profits many.

(3) The concentration of industries has decreased, and homogeneous competition has further spread to high-end products. The efficiency of the steel industry is not good, and the willingness of enterprises to merge and reorganize has declined. In 2014, the output of the top 10 crude steel production enterprises accounted for 36.6% of the total output of the country, a year-on-year decrease of 2.8%.

(4) The sharp increase in export products has triggered the aggravation of trade frictions. In 2014, China's steel exports accounted for 32.2% of the global steel trade volume, a record high. Among them, the total export of boron-containing steel in the first 11 months was 39.76 million tons, accounting for about 47.5% of the current period. Many countries have adopted trade protection measures for Chinese steel products.

(5) The phenomenon of substandard steel and no-ticket sales disrupt the steel market, and fair market competition urgently needs to be resolved. Affected by the industry downturn, some small and medium-sized enterprises have adopted illegal and illegal means such as substandard steel production and no-ticket sales to obtain market share and profits, which has seriously disrupted the fair competition environment in the market. Not only does it squeeze the market space of formal operating companies, but it also provides living space for backward production capacity, which is not conducive to the healthy development of the industry.

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Jiahe County was established in 1639, covering an area of 699 square kilometers, governing 9 towns and 1 township, with a population of 420,000. It is one of the counties with the smallest area and the highest population density in the province.

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