In recent years, the replacement of steel production capacity has become a hot word for the development of the industry, and a large amount of production capacity established in the first decade of this century has become the main force of replacement. The steel production capacity is gradually moving out of cities and then to the outskirts or coastal areas, and the development of China's steel industry has entered a new historical stage.
In recent years, through supply-side structural reforms, a large number of zombie production capacity and illegal production capacity have been withdrawn from the market, which has freed up market space for the development of the iron and steel industry. . If we say that the capacity reduction before 2017 is still “policy” capacity reduction, after 17 years it will be transformed into a new phase of capacity reduction characterized by “replacement of production capacity” and “reorganization between enterprises”.
After the merger of Baowu Iron and Steel in 2017, they successively participated in the reorganization of Zhonggang, and in 2019 they passed the reorganization of Maanshan Iron and Steel. Shougang also transferred 15% of its shares to Baowu, China through equity transfer. , Baowu Shougang Strategic Alliance or Chenggang Steel Corporation reorganization new model. In addition to the frequent actions of central enterprises led by Baowu Iron and Steel, the joint reorganization of private enterprises has also entered a climax. Steel mills in Wu'an, Tangshan, and Jiangsu provinces are undergoing large-scale restructuring of their production capacity. The steel production capacity in Shandong will also be relocated. Rizhao-Qingdao-Linyi will become a new steel industry belt in the eastern coastal areas of China.
Why is the restructuring between steel mills accelerating?
From a policy perspective, as early as September 2016, the State Council issued the 46th document set mainly for the merger and reorganization of the steel industry. By 2025, 60% -70% of China's steel industry output will be concentrated in 10 Among the large groups around the world, there are 3 to 4 iron and steel groups of 80 million tons and 6 to 8 iron and steel groups of 40 million tons.
As of the end of 2018, Baowu Iron and Steel, the largest steel producer in China, produced 67.43 million tons of crude steel in 2018, which means that 80 million tons of steel companies established in 2016 had not yet appeared in 2018. In 2019, Baowu Iron & Steel will become the first domestic iron and steel company with a crude steel output exceeding 80 million tons after restructuring Maanshan Iron and Steel.
From the perspective of industrial development, China's steel industry has entered a mature period, and mergers and reorganizations among enterprises will be a major feature of the industry's development. Mergers and reorganizations between enterprises can increase the concentration of industry capacity, thereby enhancing the overall competitiveness of the company; the increased concentration of capacity will be more conducive to the use of China's institutional advantages and improve the ability to resist risks; Regional regulation and control policies to alleviate the pollution problems of iron and steel enterprises.
How does Shandong do it?
Shandong Province is one of the top three steel provinces in China. As of the end of 2018, Shandong's total steel production capacity was around 90 million tons. According to the “Notice on the Implementation Plan for Accelerating the High-Quality Development of the Seven High Energy Consumption Industries” issued by Shandong Province in 2018, in the future, the steel production capacity in Shandong Province will gradually move towards Japan-Linzhou Coastal Advanced Steel Manufacturing Industry Base and Lai-Thai Inland Boutique The steel production base will be transferred. By 2022, the production capacity of steel companies in Jinan, Zibo, Liaocheng, Binzhou and other transmission cities will withdraw more than 70%, increasing the steel production ratio in coastal areas such as Qingdao Dongjiakou, Rizhao Lanshan and Linyi Lingang to 50. By 2025, the steel production capacity of transmission channel cities and areas along the Jiaoji Railway should be exhausted, and the proportion of steel production capacity in coastal areas will increase to more than 70%.
Recently, Shandong Province has announced plans for the transfer of steel capacity in Zibo, Jinan, Binzhou and other places. Among them, Shandong Guangfu Group, Chuanyang Group, Zibo Qilin Fushan Iron and Steel Co., Ltd. and Shandong Longsheng Steel Co., Ltd. will all exit in 2022. The total iron and steel capacity exceeding 10 million tons was transferred to Rizhao Iron and Steel Holdings Group; On December 14, Shandong Iron and Steel Co., Ltd. issued a notice on the Shanghai Stock Exchange. Shandong Iron and Steel Holdings' subsidiary Shandong Iron and Steel Group Rizhao Co., Ltd. plans to purchase Shandong Minyuan Iron and Steel Co., Ltd. is located in Zhangqiu District, Jinan City, with an existing capacity index of 1.19 million tons of pig iron and 1.7 million tons of crude steel, with a transaction value of 1.496 billion yuan.
Earlier in May, the website of the Shandong Provincial People's Government had public information saying that "Weifang Special Steel, Luli Steel, Juneng Special Steel and Rizhao Steel discussed and exchanged steel capacity, and said that the capacity of the three steel companies in Weifang It may also be transferred to Rizhao Steel, but this information has not been confirmed in the official media before publication.
So far, the adjustment of the steel production capacity along the Jiqing line in Shandong Province, except for the 4.3 million tons of Xiwang Special Steel, can be basically determined. In the future, the steel production capacity in Shandong Province will be concentrated in the advanced steel manufacturing industry bases in Japan and Linhai and Lai-Thai. Lu boutique steel production bases, among which Qingdao Dongjiakou, Rizhao Lanshan and Linyi Lingang will become important manufacturing bases for advanced steel production in the eastern coast of China.
Table 1 Steel whitelisted enterprises in Shandong Province and their production capacity
| Business Abbreviation || location |
| Remark |
| Shangang Laigang || Laiwu || 1100 || Yongfeng 2 * 530m³ exited and transferred to Yongfeng Zibo; phased out 6 * 1080m³ blast furnace and newly built 2 * 3800m³ blast furnace |
| Rizhao Steel || sunshine || 940 || Received Guangfu, Chuanyang, Zibo Qilin Fushan, Longsheng production capacity |
| Shanxi Iron & Steel || Jinan || 880 || Withdrawal, production capacity is transferred to Rizhao boutique steel base; purchase of Minyuan production capacity increases steelmaking by 1.7 million tons |
| Weifang Special Steel || Weifang || 420 || May be transferred to Rizhao |
| Shandong Fulun || Binzhou || 420 || Withdrawal in 2022, production capacity transferred to Rizhao Steel |
| Qingdao Special Steel || Qingdao || 700 || - |
| Guangfu, Shandong || Binzhou || 580 || Withdrawal in 2022, production capacity transferred to Rizhao Steel |
| Yongfeng Zibo || Zibo || 280 || Withdrawal in 2022, production capacity transferred to Linyi Shandong Iron and Steel Group Yongfeng Lingang Co., Ltd. |
| Shandong Chuanyang || Binzhou || 280 || Withdrawal in 2022, production capacity transferred to Rizhao Steel |
| Linyi Jiangxin || Linyi || 280 || Jiangxin and Huada capacity transferred to Linyi Steel Investment Group Co., Ltd. |
| Shandong Juneng || Weifang || 337 || May be transferred to Rizhao |
| Zibo Hongda || Zibo || 300 || Eliminate |
| Taishan Iron and Steel || Laiwu || 449 || - |
| Linyi Sande || Linyi || 285 || - |
| Shandong Luli || Weifang || 225 || May be transferred to Rizhao |
| Xiwang Special Steel || Binzhou || 430 || - |
| Shiheng Special Steel || Taian || 270 || Reduced production capacity of Shiheng and Xinhua Special Steel |
| Shandong Huaxin || Yantai || 140 || - |
| Longsheng Steel || Zibo || 200 || Withdrawal in 2022, production capacity transferred to Rizhao Steel |
| Qilu Special Steel || Jining || 190 || Reorganization |
| Shandong Minyuan || Jinan || 190 || Withdrawal in 2022, production capacity transferred to Shansteel Rizhao Fine Steel Base |
| Qi Lin Fu Shan || Zibo || 140 || Withdrawal in 2022, production capacity transferred to Rizhao Steel |
| Shangang Rizhao || sunshine || 850 || Jigang production capacity + Minyuan production capacity |
What is the status of Shandong steel industry in the future?
At the end of 2018, Shandong's steel production capacity ranks third among all provinces in the country. By the year 2025, Shandong Province will occupy 1-2 of the top ten large steel enterprise groups. From the current situation of the steel industry in Shandong Province, It is possible to have iron and steel enterprise groups with a steelmaking capacity of about 30 million tons, and the two comprehensive steel group companies are Shandong Iron and Steel and Rizhao Steel. It is difficult to form a steel enterprise group with a scale of more than 80 million tons unless it is moving towards cross-provincial mergers and reorganizations. In the future, the number of 3 to 80 million-ton steel groups that may be realized in China will inevitably be greater than that of other provinces. A collection of steel production bases.
Table 2 China's Top 20 Crude Steel Production in 2018
| Domestic ranking || global ranking || the company || Production (million tons) || Remark |
| 1 || 2 || China Baowu Iron & Steel Group || 67.43 |
| 2 || 4 || HBIS Group || 46.8 |
| 3 || 6 || Shagang Group || 40.66 |
| 4 || 7 || Ansteel Group || 37.36 |
| 5 || 9 || Jianlong Group || 27.88 |
| 6 || 10 || Shougang Group || 27.34 |
| 7 || 13 || Shandong Iron and Steel Group || 23.21 |
| 8 || 14 || Valin Group || 23.01 |
| 9 || 16 || Magang Group || 19.64 || Mergers in 2019 |
| 10 || twenty one || Bengang Group || 15.9 |
| 11 || twenty two || China Taiwan Steel Corporation || 15.88 |
| 12 || twenty four || Fangda Group || 15.51 |
| 13 || 27 || Baosteel Group || 15.25 |
| 14 || 28 || Rizhao Steel || 14.95 |
| 15 || 29 || Liugang Group || 13.53 |
| 16 || 33 || CITIC Pacific Special Steel Group || 12.55 |
| 17 || 35 || Sanming Steel Group || 11.68 |
| 18 || 36 || Shaanxi Iron and Steel || 11.38 |
| 19 || 37 || Hebei Jingye Steel Group || 11.25 |
| 20 || 38 || Angang Group || 10.97 |
| twenty one || 39 || TISCO Group || 10.7 |
2020 will be the last year of the "Thirteenth Five-Year Plan", and the "14th Five-Year Plan" will also be gradually introduced. The next five years will be a key stage in the adjustment of the capacity structure of traditional industries. Gradually forming and putting into production, the structure and characteristics of basic raw material supply will also change significantly. Large-scale, industrialization, and coastal layout will be important features, and the next 5-10 years will be a period of multi-cycle resonance in the economic cycle. The industry adjustment and development are facing downward pressure on the cycle, adjust the attitude of the company, and meet the dawn The darkest stage before will be the main goal of the company's development in the next ten years.