China Releases Steel "Limited Production Order"
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The notice pointed out that there are some contradictions and problems in the current steel industry in China: the steel sheet has a serious surplus and the sheeting problem is particularly prominent; the proportion of backward production capacity is relatively high, and there is a blindness in the recovery of production; the excessive increase in imported iron ore will easily lead to business risks. .
According to the notice, the iron and steel industry must take total control as the current priority when the downstream industry has not yet fully recovered. It is necessary to resolutely curb excessive production growth, further increase efforts to link up banks and enterprises, and to iron and steel companies that are outdated by steel companies and blindly expand production in spite of market demand, they must ask local commercial banks to reduce or stop loans. Strict implementation of differential pricing policy, for the elimination of converters with converters of 20 tons or less, and the limited production capacity of converters below 120 tons, electric furnaces below 70 tons, and blast furnaces below 1,000 cubic meters constructed after August 2005 Differential electricity price.
In response to the problem of excessive growth of imported iron ore this year, the notice requires that enterprises with imported iron ore qualifications should correctly grasp the quantity and rhythm of imported iron ore according to the actual needs of domestic steel production and avoid blindly importing large quantities of iron ore. The Iron and Steel Association and Minmetals Chamber of Commerce shall study measures to further reduce the number of intermediate iron ore import traders, strengthen the process of monitoring the quantity and direction of imported iron ore, prevent the inflow of enterprises that do not conform to industrial policies, and seriously implement imported iron ore. The agency system prevents the massive accumulation of iron ore and the resale of high prices.
Statistics show that in the first quarter of this year, China’s crude steel production reached 1,274.435 million tons, a year-on-year increase of 139%. In the same period, global crude steel production fell by 228% year-on-year. If China's output was deducted, global crude steel output fell by 369% year-on-year. Customs statistics show that China imported 13.1 billion tons of iron ore in the first quarter, an increase of 18% year-on-year. The industry believes that China's steel production remains high, mainly due to a serious excess capacity, small and medium-sized steel mills around the use of its cost advantage, production resumed quickly.