The national major steel industry layout is basically completed

On the 18th, the State Council issued a notice on the list of government-approved investment projects (the 2014 version). Regarding how steel, non-ferrous, cement, and shipbuilding projects were changed from approval to filing and how to resolve excess capacity in these industries, Li Zhongjuan’s deputy inspector explained the following:

The decentralization of foreign investment is very large. In the 2014 government-approved list of investment projects, the deregulation and cancellation of the industrial sector is also very large. This includes steel, cement, electrolytic aluminum, shipbuilding approval issues, canceled the approval, and implemented the record. There are several major considerations: The first is that the country's important project layout is basically completed. Since 2004, I have taken iron and steel as an example. The Committee has approved about 48 steel projects. There are Shougang and Jingtang Steel, which are familiar to everyone. There are Anshan Iron and Steel Bayuquan Steel, Baosteel's Zhanjiang Iron and Steel, and Wugang's Fangcheng Steel. This is modern. Coastal steel base project. There are also relocation projects for a series of urban steel mills such as Shougang, Chongqing Steel, Dalian Special Steel, Guangzhou Steel, Hegang, and Kunming Steel. There are also some steel projects such as Baosteel Xinjiang Bayi, Jiuquan and Baotou, as well as a series of inland resources such as TISCO and Pangang. The implementation of these projects has played a very important role in the adjustment of the industrial layout. This is what I want to say about the completion of the industrial layout of major national projects.

The second consideration is that the effectiveness of the country’s measures to curb new production capacity has emerged. Just now the reporter was more worried. In October 2013, the State Council issued guidance on resolving the contradiction of serious overcapacity, which is “Gufa. In 2013(41), this document requires that all departments should not, under any name or in any way, prepare new capacity projects in industries with serious excess capacity. This guideline was introduced for one year. From January to September of this year, fixed-asset investment in industries with overcapacity, such as steel, cement, electrolytic aluminum, and flat glass, dropped by 5%, 14.4%, 31%, and 6%, respectively, year-on-year. We also analyzed the situation of the investment structure, basically for the renewal of the project, mainly for some structural adjustment, energy-saving emission reduction and product deep processing projects. Therefore, we feel that overall, the state’s measures to curb new production capacity have begun to achieve results.

The third consideration is the initial formation of a market environment that forced excess production capacity to exit. Currently, steel, cement, electrolytic aluminum, shipbuilding and other industries have entered the platform period. I have a few figures here. From January to September, the output growth of steel was 2.3%, and the shipbuilding industry was down by 14.9%. The increase in output of each industry was at the plateau or began to decline. The production and operation of industries with excess capacity are basically at a low profit. The profit margin of the steel industry from January to September was 0.71%, and electrolytic aluminum was negative 3.73%. It was basically profitable or not profitable. As a result, the willingness of enterprises to expand production capacity was significantly weakened and investment became more rational and more. Focus on transformation, upgrading, and competitiveness projects. Some companies are still in the state of suspend production or semi-discontinued, and some advantageous companies and disadvantaged enterprises have begun to differentiate. Therefore, an environment in which companies that did not have competitiveness through the market mechanism to withdraw from the market gradually formed. This is the third aspect we want to say.

The related aspects of the fourth aspect are gradually improved. On the one hand, the Ministry of Land and Resources and the Ministry of Environmental Protection have stepped up enforcement efforts. In particular, the implementation of the new environmental protection law will effectively promote the internalization of environmental protection external costs and encourage some companies that do not meet environmental standards to withdraw from the market or make adjustments. Its cost expenditure. At the same time, the “Government-approved Investment Projects Catalogue (2014 Edition)” cancels the approval of projects such as steel, cement, electrolytic aluminum, and shipbuilding. It also requires that these industries with severe overcapacity continue to strictly implement guidance, and local and various departments must not Register new capacity projects in any other way and in any way. All departments and agencies shall not handle land, sea area supply, evaluation, EIA approval, new credit support, and other related businesses, and shall work together to resolve all conflicts of overcapacity. This has a clear requirement on the first page of the document that we have approved in the catalogue. On the other hand, the Committee of the Ministry of Industry and Information Technology of our Party Committee is building a project information database and information early-warning mechanism for industries with serious overcapacity such as iron and steel. This will promptly release information and guide enterprises to adjust investment directions and priorities. The current project information database is being tested. Operation and information early warning systems are under construction. This is a measure that has laws and regulations, departmental regulations, and information and regulatory aspects at the national level.

We believe that after canceling the approval of industry investment projects with serious overcapacity, the investment subject must not only consider internal conditions but also consider external conditions at the same time, and therefore be more cautious. Banks will be more cautious in their credit support. The time saved for project approval and related procedures will also be conducive to the implementation of technological transformation and structural adjustment projects for enterprises' investment, and will play an active role in promoting industrial restructuring and transformation and upgrading.