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February 18, 2008, CVRD announced an agreement this year’s iron ore price up 65% over the previous year. China’s total iron ore imports this year will exceed 400 million tons, such as the figure of China’s steel enterprises in the fiscal year 2008, the cost will rise by more than 100 billion U.S. dollars. As the world’s largest iron ore importer, why do we often lack the pricing power of discourse?
In late January 2008, the Brusselsbased International Iron and Steel Institute (IISI) recently released: 2007 to 489 million tons, China has once again become the world’s largest producer of crude steel production. China’s crude steel production is not only the world’s first, and the production of more than the sum of the second to eighth, accounting for 36.4% of global production in 2006, compared to 33.8% in 2005 to 31% in 2004 to 26.2%, showing increasing trend year by year.
China’s steel output held steady first in the world more than a decade. This 30year reform and opening up, China’s iron and steel industry has made considerable progress, has become the world’s largest steelproducing countries, not only for the sustained, healthy and stable development of materials provides a strong support, but also for the world steel market the prosperity and stability has made a great contribution.
However, in the steady development, China’s iron and steel industry has also been growing pressure: how to deal with excess production side of ordinary steel, the other side need to be imported from abroad every year nearly 20 million tons of high valueadded steel embarrassment? How to deal with the world’s largest importer of iron ore pricing, the right to speak but they often lack the dilemma? How to deal with the domestic water, coal, increasing scarcity of resources in reality? How to deal with the environmental capacity is nearly saturated the “inhibition”? Obviously, this series of question marks have been involved not just one aspect of the industry.
Sounded the assembly number
China’s steel output up to 400 million tons of iron and steel enterprises have up to 1000, only one in Tangshan City, there are 56 iron and steel enterprises, more than the sum of iron and steel enterprises across Europe! Decentralized management system caused by a low degree of industrial concentration has been one of China’s steel industry ills.
In 2006, China’s top five steel producing iron and steel enterprises accounted for only 24.8% of the national total output than in 2000 to reduce by 10.6 percentage points; iron and steel industry leader Baosteel’s 2005 output of 22.73 million tons or so, just of the national total 7.8%. The steel industry in China, the degree of concentration to fall at the same time, the international steel giants are busy rushing about in the strongstrong big wave of consolidation: the world’s largest steelmaker Mittal and the world’s second largest steelmaker Arcelor in the in 2006 merged to become across Europe, Asia, North America, South America, Africa, on five continents, the steel production capacity of about 120 million tons, accounting for about 10% of the global market of the superjumbo; India’s Tata Group and the Brazilian National ferrous metallurgy began his Europe’s second largest steel companies in bidding battle for the British Hekelusi; Japan, Brazil stepped up the pace of domestic iron and steel industry consolidation, such as Nippon Steel and Sumitomo Metal accelerated the consolidation and reorganization of the defensive.
Not only reduces the low degree of concentration of China’s iron and steel enterprises in international competition, economies of scale and technological research and development competitiveness, but also in the same resources, is difficult to import foreign, have lost their pricing, the right to speak, seriously damaging the interests of the domestic industry.
To import iron ore, for example 20042006, China’s share of world imports of iron ore, iron ore exports increased from 1 10 to 1 3, the world’s new iron ore exports of 60% or more were China absorbed. Chinese steel production dependent on imported iron ore from the mid90s last century, 25% to the current 55%. In the meantime, the world’s three major iron ore companies have a monopoly of about 70% of the world’s resources of iron ore trade. In 2005 China’s steel enterprises and the international iron ore giant Vale do Rio Doce (CVRD), BHP Billiton (BHP) and defeated the negotiations, in the absence of any power under any defense accepted by the other 71.5% price increase request, the Chinese iron and steel enterprises were paid as high as 57 billion in additional bills. According to industry sources, Rio Tinto in January 2008 to the Chinese market, sales of one million tons of iron ore spot prices up to 185 ~ 190 U.S. dollars ton, higher than longterm contract price of 120%. BHP Billiton, CVRD also called on China’s exports of iron ore prices by 70%. Capacity of the international iron ore suppliers and the high concentration of China’s domestic steel production capacity of high dispersion in sharp contrast to China, as the world’s largest iron ore importer is in pricing right to speak on the pale.
It is noteworthy that China has in the “iron and steel industry development policy” clearly stated: “By 2010, iron and steel smelting more substantial reduction in the number of firms, the domestic steel top 10 enterprise groups, the country’s total steel output of the ratio of output to reach 50 % or more by 2020 over 70%. ” With the Anshan and Benxi Iron and Steel, Shougang and Tangshan Steel and so the rapid restart the joint can be said that China’s steel industry, the assembly number is sounded.
And strive to “good” word at the head
In addition to muchneeded adjustment of industrial concentration, the Chinese iron and steel industrial structure has become urgent. Not long ago, Hangzhou, a famous hotel than engage in an external wall decoration, drawn from Spain using a 3 mm steel plate imported a total of more than 70,000 cubic meters, to spend up to 100 million yuan RMB … …
China from 2003 to 2007 just five years, new steel production capacity nearly 250 million tons, has become the world’s largest steel exporters. At the same time, China has to import every year a large number of highquality steel, with an average import price in 1100 U.S. dollars per ton or more, while China’s average export price of steel is only 680 U.S. dollars? Further point of view, China’s exports is the largest iron and ferroalloy and nonalloy steel primary products, the product of a lower level of processing; imports most is the degree of processing depth, high technical content of the plate. In contrast, the product structure is irrational, consumption of large, lowgrade and low added value, lack of competitiveness is very clear that China’s steel industry faces an urgent structural adjustment pressures.
For industrywide high energy consumption, serious pollution, process equipment, poor and backward production capacity accounts for about 30% of total capacity of this situation, the Chinese Academy of Engineering, honorary president of Chinese Society for Metals Yin Yu pointed out that the next 10 to 15 years, China Iron and Steel Industry Products structural adjustment and optimization, it should be focused on capital investment sheet products, in particular, including automotive panels and coldrolled silicon steel sheet, etc., highend products. Promulgated by the state, “Steel Industry Development Policy” also made clear that China’s steel industry will control the overall growth and promote technological upgrading and industrial layout, changes in product structure adjustment, new capacity will be combined with the elimination of backward production capacity, in principle, is no longer a significant expansion of steel production capacity.
At present, China included in the scope of blast furnace and eliminate backward production capacity of 99.8 million tons, this part of the phasing out of inefficient capacity will upgrade the industrial structure of China’s steel industry, to provide protection.
Energysaving emission reduction of the iron and steel industry is not responsible for the bottleneck
China’s steel output held steady first in the world more than ten years for such a world “first”, the National Development and Reform Commission Industry Xiong Bilin, deputy director of calculations: in 2006 the added value of China’s steel industry, 3.14% of total GDP , while those consuming more than 300 million tons of standard coal, accounting for about 15% of energy consumption; consumption of fresh water to nearly 40 million tons, accounting for the total industrial consumption of fresh water 14%; iron and steel industrial dust emissions by up to 1.2 million tons, accounting for 14% of industrial emissions; sulfur dioxide emissions by 1.42 million tons, accounting for 6% of total emissions.
Large iron and steel industry is energy consumption, China’s pollution control still uses the total amount of means of control, the environmental capacity of the pressure of a huge iron and steel industry. But precisely because of the huge consumption of energy, making energysaving emission reduction iron and steel industry, shutting down and eliminate backward steel production capacity of China’s special significance: a year, saving more than 5000 million tons of standard coal, watersaving 100 million tons, reducing sulfur dioxide emissions from more than 40 million tons.
SASAC was formally issued in January 2008 entitled “On the central enterprises to fulfill their social responsibility guidance” document, the first time clearly pointed out that enterprises in the creation of wealth, but also bear the social needs of the other responsibilities. Energysaving emission reduction, for China’s steel enterprises have not only the task, it is share of responsibility.
According to statistics, in 2007 the first 5 months of the focus of a comprehensive energy consumption per tonne of steel and mediumsized iron and steel enterprises 626.86 kilograms of standard coal ton, down 4.4%, the comparable energy consumption per ton steel 605.76 kilograms of standard coal ton, down 5%, fresh water consumption per ton steel 5.5 tons ton, down by 19.2%. Efflux 9.42% decrease in total waste water, smoke and dust fell 6.5%, industrial dust fell 2.9%. This can not but said it was a welcome change.
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