How to look at new breakthrough of steel supply structural reform

Since 2014, as China’s economy has entered a new normal, various deep-seated problems hidden in the period of rapid economic growth have begun to break out, and serious overcapacity of galvanized steel pipe in the steel industry has surfaced. At the 11th meeting of the central leading group for financial and economic work in November 2015, general secretary stressed the importance of strengthening supply-side structural reform. According to the central economic work conference held in December 2015, economic and social development in 2016 will focus on the following five tasks: cutting overcapacity, reducing inventory, deleveraging, reducing costs and strengthening weak links.

In 2016, the opinions of the state council on relieving overcapacity of rectangular hollow section in the steel industry was released, which clearly proposed to reduce overcapacity of 100 million tons to 150 million tons within five years. Subsequently, the deadline for the complete ban on “ground steel” was set on June 30, 2017.
In this way, in the past three years, the steel industry has risen to the challenge, resolutely went ahead, took the initiative to adjust and accelerate the transformation, and realized the steady distribution and placement of about 500,000 employees. The industry has taken on a new look. Looking back on this journey, we have not only made remarkable achievements, but also gained a series of valuable experience that can be used to continue to overcome difficulties.

First of all, we succeeded in doing what we wanted to do but failed to do over the years in the absence of successful precedents to follow. This was due to the strong synergy formed by the unity of thought and coordination from the central government to the local government and from industries to enterprises.Take the thorough eradication of “ground steel” and “cancer” as an example. As early as 2002, the relevant departments of the state defined that “ground steel” “can not effectively carry out composition and quality control” attributes. However, because of the intricate interest entanglements, this “cancer” is growing bigger and bigger. This time, steel pipe suppliers should step by step establish reporting supervision mechanism, through the typical case investigation, accountability and eventually broke the interests of the sweet song. we will intensify the use of market and legal measures to reduce excess capacity. After enterprises, associations, government departments at all levels of study repeatedly, output is determined by the market regulation scheme, in order to reduce the” zombie “companies and backward production capacity of mild steel tube, invalid as the key point, and steel production by market supply and demand adjustment, eliminate excess capacity and ensure the effective supply to avoid the price of steel jump sharply.