After 20 years of rapid growth, the Chinese crude steel production fell for the first time in the first half of this year. 

Recently, the China Steel Association announced the first half of the steel industry data. Enterprise Observer newspaper reporter noted that the country's crude steel production in the first half of 410 million tons, down 1.3%. According to the China Steel Association say, in 2014 China's crude steel production is likely to enter the symbol of the peak area. The trend in developed countries with reference to changes in crude steel production, after China's crude steel production reached a peak, the downward trend in the vicinity of a peak after a certain period of volatility.

In this regard, China United Steel Net analyst Hu Yanping accept corporate Observer newspaper reporters, said:. "Production and sales decline shows that enterprises survive pressure increase, the steel industry will enter a real adjustment"

Lange steel analyst Zhang Lin corporate Observer newspaper reporter, said:. "Despite the modest decline, but the significance of this change significantly, indicating that companies tend to further determine the future pessimistic." She believes that winter in the next few years, a group of "not strong enough" steel prices will be eliminated.

This is before the National Metallurgical Bureau, former director of the National Federation of Chamber of Commerce, former honorary chairman Zhao Xizi metallurgical point of view the same: "By 2015, some of the iron and steel enterprises in order to better how to 'dead'."

Market, under the dual pressure of environmental protection
Steel tanks were forced to slow down

For a long time, to cut steel production capacity and output is a major task of China's industrial management. According to incomplete statistics, from February 2004 to date, the state has issued the relevant departments have more than 20 elimination of backward production capacity of iron and steel policy. However, the fact is that the cut more, even in the steel industry has begun to enter a downturn after 2008, actual production of crude steel is still rising.

The steel production in 20 years is how the emergence of the first down? Enterprise Observer has learned that the market is the main reason Forced and environmental pressures.

After 2013, long-term price slump led to some steel enterprises to survive difficult, some steel enterprises, including Shanxi Haixin Iron and Steel, including the brink of bankruptcy, with Baosteel, Hebei Steel as the representative of the steel carrier began to strictly control production. However, as some product sales including automotive sheet, including still smooth, crude steel demand is still increasing. Many enterprises in order to capture a larger market share in the competition, at vigorously "hemorrhagic" production, rather reclaim losses, so the overall production is still on the rise.

In a sense, this undisciplined behavior is a common phenomenon. Steel Association acknowledged that many companies are want others to self-regulation, self-regulation does not own. To this end, China Steel Association said many times companies to ride out the storm, the most direct and effective way is to control production, and "do not pay no shipping, no contract is not production, not less than the cost of production," the benign Production situation. But with little success.

By 2014, China's crude steel demand reached its peak and begin to decline, steel prices dropped back to 2003 levels, almost all steel products are increasing sales pressure. In this regard, Hu Ping believes that the increasingly tough market situation, many companies are finally starting senses, "truly live as the current top priority."
  Another direct reason is that long-term downturn in the real economy, trigger a bank guard, pumping Loan in recession when steel and other industries have occurred. Data show that China Steel Association member companies in 2014 debt was 3.2 trillion yuan, assets and liabilities was 68.3%, some companies debt rate as high as 80%. Only in the first quarter of this year, bank loans reached 65 billion yuan pumping.

Zhang Lin, said, suffered smoke Bank loans, while actively partial steel prices declining external financing, such as Hebei Iron and Steel cost efficiency, an important step is to stop new loans. Overall, the first half of 2015, steel companies fell 6.43 percent bank loans, including short-term borrowings fell by 9%.

Their own lack of ability of blood, and banks reduced blood supply, most steel prices naturally are unable to maintain "hemorrhagic" Production situation, production of natural matter of course.

In addition, Zhang Lin believes that environmental pressures continue to increase has become one of the environmental standards partly cut in steel prices.

Coming-out period
Cost saving is the key to live

For the current situation in the steel industry, the view that the worst is over, but more human judgment is even more pessimistic.

Ministry of Industry and Information Technology organized in July in the first half 2015 on steel industry analysis forum, Deputy Minister of Industry and party members Mao Weiming stated that industrial growth positive factor in the increase, but the steel industry has not significantly improved the overall situation, "the face of market oversupply, continued low efficiency, environmental protection and other difficulties further increase the pressure, the situation is more severe. "

Zhao Xizi believes that during the "Thirteen Five" will be the real "winter" China's steel industry.

Zhang Lin said that along the way, and the integration of Beijing, Tianjin and the steel industry is expected to bring a new turn, but the effect can only appear to be in a few years, "in the double squeeze market and environmental policy, there will be a number of steel companies of cash fracture, he died before the arrival of spring. "

For steel prices, in the meantime be able to live is more important than everything.

In response to the harsh situation, steel prices recount. Specific measures include adjusting the industrial structure, develop non-steel industry, construction, electronic business platform, to increase export efforts and so on. "Has not yet seen particular success stories." Hu Ping said that after all the iron and steel enterprises are generally large in scale, burden, difficult transformation turned overnight. "And the development of the steel industry is closely associated with the background, when the downstream industry demand for product quality requirements are generally not high, steel prices go too fast and unreasonable."

Zhang Lin said that for most steel companies, the cost efficiency, although a cliché, but the most effective. She said the Tangshan area of some private steel enterprises, such as Rongcheng Steel, Jianlong Steel still able to achieve a profit margin of about 7 percent, far higher than the industry standard. "In fact, these business equipment, products are not high, but higher productivity and lower costs."

Steel Association disclosed data show that the current polarization between the rich iron and steel enterprises have been very obvious. In the first half, the first 10 companies total profit 16.59 billion yuan profits, an increase of 113.1%; 10 companies a total loss before loss of 13.97 billion yuan, an increase of 152.3%.

Both compared to the most fundamental gap from the production efficiency. Pros and cons of business such as manufacturing cost gap of up to 900 yuan pig iron. Better efficiency per capita steel production capacity of around 1,000 tons of enterprises, some enterprises of less than 500 tons. China Steel Association believes that this clearly reflected the modern enterprise management level, it is worth studying.

Hebei Iron and Steel Group chairman Yong also believes that the plight of the steel industry is fundamentally due to their own work is not done, did not infected during the high-profit "diseases of affluence" caused by eradication.

Facts have proved that the eradication of diseases of affluence for iron and steel enterprises cost efficiency significantly. Hebei Iron and Steel is still, for example, the year 2014, Hebei Iron and Steel by slashing the additional costs, tapping the potential synergies to reach 27.6 billion yuan.