From March 29 to 30, the 16th China Steel Summit Forum was grandly held in Zhengzhou.

On the morning of March 30, there were many friends on Ruyi Lake on the rippling blue waves. The main forum of the summit kicked off. Liu Shangjin, Vice Governor of the People's Government of Henan Province, and others delivered speeches. The wonderful speeches won bursts of applause.

Liu Shangjin, Vice Governor of Henan Province People's Government

The steel industry is an important basic industry of the national economy and an important symbol of the country's economic level and comprehensive national strength. In his speech, Liu Shangjin first expressed his sincere welcome to all experts, scholars, entrepreneurs and friends who came to the conference. He pointed out that since 2023, the Henan Provincial Party Committee and the Provincial Government have focused on cultivating and expanding key industrial chains, accelerating the construction of a modern industrial system, creating seven trillion-level industrial clusters and 28 billion-level key industrial chains, and will accelerate the promotion of Henan's steel industry in the future. Reorganization and integration will greatly increase industrial concentration, make steel groups stronger, better and bigger, and contribute steel power to the construction of modern Henan.

In the morning's keynote speech, Zhang Junxuan, deputy director of the Proposal Committee of the 14th National Committee of the Chinese People's Political Consultative Conference, Jiang Wei, deputy secretary of the Party Committee, vice president and secretary-general of the China Iron and Steel Association, Li Tao, counselor of the Henan Province Government and former director of the Provincial Department of Industry and Information Technology, and Jia Yinsong, secretary-general of the All-China Metallurgical Chamber of Commerce, discussed the future development and changes of China's economy and the breakthrough of the steel industry's development difficulties, helping the steel industry take the path of high-quality development.

Jiang Wei, Deputy Secretary of the Party Committee, Vice President and Secretary-General of China Iron and Steel Association

In his keynote report, Jiang Wei summarized the operation of the steel industry and introduced the key tasks of the steel industry in 2024. He pointed out that the current steel industry presents the characteristics of "three highs and three lows" of "high output, high cost, high inventory, low demand, low price, and low efficiency." In Jiang Wei's view, the main reason for this characteristic is that the elasticity of output on the supply side has been excessively released, market demand has dropped year-on-year, and corporate inventories have increased significantly, which has supported upstream raw material prices and suppressed steel prices. It is urgent to unify thinking within the industry, reduce production intensity, eliminate vicious competition, and ensure that steel mill inventories return to normal levels in previous years as soon as possible.

Jiang Wei pointed out that the current operation of China's steel industry has four major characteristics. First, China's steel output has remained above 1 billion tons for four consecutive years, while apparent consumption has declined for the first time for three consecutive years and has fallen below the previous high for the first time. "China's industrialization process has not yet been completed, and it will take a long time for the steel industry to maintain a high scale." Jiang Wei said.

Second, production capacity has increased significantly, output has been released too quickly, and corporate inventories have hit a new high in the same period. According to data from the Iron and Steel Association in early March, the key statistics show that the steel inventories of steel companies were 19.52 million tons, an increase of 1.5 million tons or 8.4% month-on-month; an increase of 1.82 million tons or 10.3% compared with the same period last year, which was at a historical high. Jiang Wei said that historical data shows that there is a clear correlation between a company's inventory level and sales profit margin. The higher the inventory, the lower the sales profit margin. Currently, corporate inventories are at the highest level in the same period in history. Reducing inventories as soon as possible is the realistic top priority for the industry to ensure benefits.

Third, the adjustment of product structure has accelerated significantly. With the changes in the development of real estate and other industries, the variety structure of steel demand has changed significantly. Jiang Wei said that overall, real estate still has no obvious bottoming out, recovery and upward trend. Manufacturing steel, large-scale equipment updates, and consumer goods upgrades will generate a certain amount of new demand for high-end steel. Construction steel companies must grasp the pace of production and adjust the product structure in a timely manner.

Fourth, steel prices have dropped significantly, fuel prices have been high, corporate profits have dropped sharply, and some companies have tight cash flow, Jiang Wei said.

"There is no closed steel industry, only closed steel companies." According to Jiang Wei, currently, China's steel industry adheres to the "1231" work direction. Focus on the fundamental task of comprehensively improving the basic capabilities of the industry and the modernization level of the industrial chain; adhere to the two development themes of green and low-carbon development and intelligent manufacturing; and focus on solving the three major pain points of the industry:Control production capacity expansion, promote industrial concentration, ensure resource security, and continue to promote the internationalization of China's steel industry. "'1 'is the foundation,' 2 'is the direction,' 3 'is the reality, and the last' 1 'is the future." Jiang Wei said.

At the same time, the China Iron and Steel Association advocates the business operation principle of "three determinations and three don't", that is,"production is determined by efficiency"(the principle of receiving orders), so as not to cause operational "blood loss";"production is determined by sales"(the principle of scheduling production), do not turn cash into inventory;"cash is fixed for sales"(the principle of delivery), so as not to turn cash into receivables. Jiang Wei believes that under the current background of industry downturn, enterprises must adhere to the principle of "three determinations and three don't" and must not have a broken window effect.

"Working hard on internal skills, reducing costs and increasing efficiency are the themes of the downward cycle." Jiang Wei pointed out that the current use of steel in the automobile industry, home appliance industry, shipbuilding industry, and new energy field has greater imagination, and competition will intensify accordingly, leaving behind more efficient enterprises.

Jiang Wei finally called on the majority of steel companies and steel industries to unite, more support, participate in and use the steel industry EPD platform and China's low-carbon emission steel standards, actively respond to CBAM and low-carbon trade barriers, and safeguard the legitimate rights and interests of China's steel industry.

author| Chen Xiaoli Wang Zhi

edit| Li Xinrui

audit| Zhang Yao

planning| Chen Xiaoli