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Policies promote the transformation and upgrading of steel, guide industry mergers and restructuring

2023-04-19

Recently, some regions have successively introduced policies to support and guide the high-quality development of the steel industry.

On April 6th, the official website of the Shanxi Provincial Department of Industry and Information Technology showed that Shanxi Province recently issued the "2023 Action Plan for the Transformation and Upgrading of the Shanxi Iron and Steel Industry" (hereinafter referred to as the "Action Plan"). Prior to this, Henan Province also issued the "Implementation Plan for Accelerating the High Quality Development of the Steel Industry in Henan Province (2023-2025)" (hereinafter referred to as the "Implementation Plan").

In an interview with the reporter of China Business Journal, a steel enterprise said that industrial upgrading is an important path for high-quality development of the steel industry. While striving to effectively release steel production capacity, it is necessary to optimize the industrial structure through industrial upgrading, and achieve transformation towards high-end fields such as knowledge intensive, technology intensive, information intensive, and service intensive. In addition, we need to fully leverage the role of market guidance, improve the synergy effect of the entire industry chain, divide labor and collaborate, achieve optimized resource allocation, and increase the supply of mid to high-end products.

Policy driven transformation and upgrading

The work objectives proposed in the above Action Plan are: in 2023, the whole industry will maintain stable operation, the proportion of advanced production capacity will further increase, the industrial chain Supply chain resilience will further strengthen, the industrial chain of special steel materials will basically take shape, the energy consumption and pollutant emissions of enterprises will further reduce, the digital and intelligent level will continue to improve, and the comprehensive capacity of the whole industry will move towards the domestic advanced level.

In addition, the Implementation Plan also proposes to complete the structural restructuring and systematic reshaping of the steel industry in Henan Province through three years of effort, and basically form a high-quality development pattern with reasonable layout, advanced technology, prominent brand, intelligent integration, and green, low-carbon, and sustainable development.

Policy support is an important support for promoting the transformation and upgrading of the steel industry.

As early as February 7, 2022, the Ministry of Industry and Information Technology and other three departments issued the "Guiding Opinions on Promoting the High Quality Development of the Steel Industry" (hereinafter referred to as the "Guiding Opinions"), which proposed to strive to achieve a reasonable layout structure, stable resource supply, advanced technology and equipment, outstanding quality brands, high intelligence level, and strong global competitiveness in the steel industry by 2025 A high-quality development pattern that is green, low-carbon, and sustainable.

The Action Plan proposes to accelerate the upgrading and transformation of restricted process equipment. Promote the implementation of the "Implementation Plan for Upgrading and Transforming Restricted Process Equipment of Shanxi Iron and Steel Enterprises", requiring the gradual implementation of capacity replacement for blast furnaces below 1200 cubic meters, converters (electric furnaces) below 100 tons, and alloy electric furnaces below 50 tons, and orderly exit in accordance with the principle of "standing first and then breaking". Strive to achieve over 90% of advanced process equipment production capacity by 2025. Accelerate the construction of key production capacity replacement projects, and strive to start construction and put into operation a batch within the year.

After the implementation of the policy, many local governments and enterprises are actively transforming. In fact, the policy leaves sufficient time for enterprise transformation. If high-quality transformation is not completed within the specified time, enterprises will face the risk of elimination. "Wang Guoqing, director of Lange Steel Research Center, told reporters that the" Guiding Opinions "gradually deepen from the basic principles, main goals, and main tasks, promote layer by layer, and have clear directions, We will lead the steel industry towards a high-quality development pattern with reasonable layout and structure, stable resource supply, advanced technology and equipment, and green, low-carbon, and sustainable development.

Accelerate the promotion of mergers and acquisitions

The Action Plan proposes to accelerate the promotion of mergers and acquisitions. Taking capacity reduction and replacement as the path, with key leading enterprises as the main body, municipal government departments have formulated effective and feasible implementation plans to accelerate the merger and restructuring of small and medium-sized steel enterprises. We will focus on promoting the substantive merger and reorganization of steel enterprises in Changzhi City, Linfen City and Lüliang City, and build large enterprise groups.

At the same time, the Implementation Plan also explicitly mentions the establishment of Henan Iron and Steel Group. Adhering to the principle of market-oriented operation, Henan Iron and Steel Group is formed with Ansteel Group as the main body. Relevant steel resources are integrated through various methods such as capital increase and shareholding, cross share exchange, production capacity investment, and mixed ownership reform. Cross regional, cross industry, and cross ownership mergers and acquisitions are carried out to build a first-class large-scale steel enterprise group.

The reporter noticed that the proposal of Shanxi and Henan provinces to accelerate mergers and acquisitions coincides with the Guiding Opinions.

Wang Guoqing told reporters that the "Guiding Opinions" start from the current situation of resources and development in China's steel industry, and the target direction is more practical. The merger and reorganization of the steel industry is not blindly aimed at achieving data goals, but rather encourages cross regional and cross ownership mergers and acquisitions of steel enterprises, changing the "small and scattered" situation of the steel industry in some regions, enhancing the endogenous driving force of enterprise development through mergers and acquisitions, and utilizing synergies to promote the leapfrog development of restructured enterprises.