Chinese steel enterprises experienced sharply shrinking profit due to various unfavourable factors in the past 11month. Zhang Xiaogang, president of the Chinese Society for Metals, pointed out at the "2022 China Steel Technology and Economy High-end Forum" on the 10th that the Chinese steel industry as a whole has entered a new downward cycle, with weak downstream demand, high production costs and a sharp decline in profitability. The steel industry has encountered unprecedented challenges.
Data released by China's National Bureau of Statistics showed that from January to October 2022, the ferrous metal smelting and rolling processing industry achieved a total profit of 29.68 billion yuan (RMB, the same below), down 92.7% year-on-year, the largest drop in total profit among 41 major industrial categories. Zhang Xiaogang said, China's steel industry is in the growth rate shift, structural transformation, dynamic energy conversion "three overlapping" special stage. This year by the epidemic, economic downward pressure increased and other factors, the downstream steel industry has decelerated significantly, especially the deep adjustment of the real estate industry, the main operating indicators fell sharply, dragging down steel consumption. High raw material cost erodes the profits of steel enterprises.
According to the China Iron and Steel Industry Association, the first three quarters, key steel enterprises coking coal procurement cost up 51.1% year-on-year, the purchase cost of blown coal rose 40.3% year-on-year, and the purchase cost of imported iron ore, although down year-on-year, but still higher than in 2019 and 2020. As a result of the national energy consumption constraint policy for high carbon emission production, steel enterprises have significantly increased their investment in energy conservation and emission reduction, and the operating costs of environmental protection equipment remain high, posing challenges to steel enterprises to reduce costs and increase efficiency and sustainable development.
How does the steel industry respond to these unprecedented challenges? Zhang Xiaogang believes that the current development of the steel industry is facing a new period, a new situation, new problems, in order to achieve high-quality development of the steel industry, it is necessary to rely on scientific and technological innovation, the extensible mode of economic growth to the internal growth model, to improve total factor productivity. At the same time, it is necessary to accelerate the construction of operational system of steel enterprises, and enhance their core competitiveness and production efficiency.
