"China's iron and steel industry, as the foundation and pillar industry of China's economic construction, has experienced sustained rapid development over the past 40 years of reform and opening up, and has the world's most complete and largest steel industry system, equipped with the world's most advanced equipment, technology and technology, and provides the world with the most abundant and complete steel products. It is a true national weapon and a backbone of steel." On December 16, He Wenbo, Secretary of the Party Committee and Executive chairman of China Iron and Steel Association, delivered a keynote speech entitled "Based on the present, facing the Future, unswervingly taking the road of high-quality Development" at the annual meeting of China's Steel Market Outlook and "My Steel".

The picture shows He Wenbo.

In his speech, He Wenbo affirmed the outstanding contribution of China's steel industry to the national economy and downstream manufacturing industry over the past 40 years of reform and opening up, and shared his thoughts on the high-quality development of the steel industry under the current situation and his ideas on capacity management.

China's steel has supported China's manufacturing industry to go global

"In recent years, China's steel industry has targeted high-end, intelligent and green development, accelerated transformation and upgrading, and made the road to high-quality development faster and faster." After more than 40 years of rapid development through reform and opening up, China's steel industry has significantly increased its influence in the world, significantly enhanced its industrial independence, and contributed more and more to the development of the world steel industry." He Wenbo proposed that the goal of steel power is being achieved.

"While realizing its own development, the steel industry has also fully supported the rapid development of downstream industries and went to the world, which may be a more important contribution." He Wenbo said, "In more than 40 years of reform and opening up, what are the two most successful things China has done? My understanding is' construction 'and' manufacturing '. China has achieved rapid urbanization and industrialization at a speed never before experienced in human history, sustained decades of large-scale construction and manufacturing capacity known as the 'factory of the world', and its foundation is first and foremost steel materials."

According to estimates, in recent years, China's annual exports of various products, steel indirect exports are more than 100 million tons, 2022 to reach 113 million tons. "That's more steel than the United States and Japan each produce in an entire year." He Wenbo said that China's steel not only meets the needs of large-scale construction and large-scale manufacturing in terms of quantity and variety, but also has been the most competitive price in the world.

"The cost of steel to build a building or a bridge in Europe or the United States is almost always higher than in China, often much higher; It is impossible to make a heavy truck in Europe or the US, or even almost any mechanical and electrical product, at the same cost of steel as it is made in China, but Chinese manufacturers can do it." He Wenbo gave an example. Where does this advantage come from? He gave the answer: "It is China's steel that supports China's manufacturing industry to the world."

With the rapid increase in the coverage and penetration rate of green and intelligent in the whole industry, the steel industry is becoming more and more new and is entering a new stage of development. He Wenbo introduced that China's steel industry, as a capital-intensive and technology-intensive super-scale process industry, provides the best application scenario for the ever-changing new generation of information technology, and digital empowerment has comprehensively subverted people's imagination of traditional industries. "Whether in the development and application of environmental technology or digital technology, today's Chinese steel is at the forefront of the world." 'he said.

He Wenbo believes that the three characteristics of a strong iron and steel country are influence, autonomy and contribution. In terms of contribution, he further explained: "To reflect the contribution to the world in both hard power and soft power." Not only can produce what others already have, but also create things that are not available in the world, leaving their mark on the history of the development of world metallurgical technology, which is the contribution of hard power."

"The world steel industry is transforming to green, how to create a global steel can actively participate in and show their ability to make a unique contribution to the global steel carbon reduction cause, so that world steel become a reliable force for human response to climate change, a new green standard and evaluation mechanism, is a challenge to world steel, but also a test of China's steel soft power, China to contribute." " He Wenbo said.

5 comments on the current development of the steel industry

He Wenbo shared his five opinions on the high-quality development of the steel industry under the current situation.

First, the structure of steel consumption continues to optimize, the proportion of steel consumption in the manufacturing industry continues to increase, and China's steel market has shown strong resilience.

He Wenbo said that under the current situation, from the macro level, the Central Economic Work Conference just held proposed "seeking progress while maintaining stability, promoting stability with progress, standing first and breaking later" and "strengthening counter-cyclical and cross-cyclical adjustment of macro policies"; At the micro level, the construction of affordable housing, the construction of "dual-use" public infrastructure, and the construction of the "three major projects" of urban village transformation will accelerate, and the implementation of these measures will form an effective support for steel consumption.

By analyzing the key operating indicators of the main steel industry such as construction, infrastructure, automobiles, ships, and home appliances, He Wenbo proposed that the steel consumption structure is changing, although affected by the downward impact of real estate, the demand for some traditional building materials has declined significantly, but the new demand for steel in the downstream areas driven by the green and low-carbon trend has increased, and the characteristics of the ultra-large scale market are still continuing. It provides valuable transformation space and opportunity for iron and steel enterprises.

Second, the total consumption of steel has reached its peak, and the total decline is an inevitable trend. From speed to quality, from total quantity to variety, the shift of focus of work is underway.

He Wenbo put forward: "The total volume has reached the peak, and the structure is optimized. The decline in total volume is not terrible, since it is already within the expectation, so we should do the right thing." He further explained that the total change is mainly affected by three factors. First of all, as industrialization and urbanization gradually enter a mature stage, the economic and social consumption structure will inevitably change, and it is a historic change, and the development history of both China and foreign countries is all the same, there is no need to worry, we should face it calmly, which is the inevitable reflection of social progress in the demand structure. Secondly, the decline in the total amount of steel under the same demand conditions is itself the result of technological progress in steel production, the steel industry continues to promote the "high strength, high corrosion resistance, high efficiency", each progress and success correspond to the reduction of material savings and emissions, which is itself the contribution of steel to the downstream development. Finally, there is the material substitution that deserves great attention. He Wenbo said that this is a typical industry common issues, there are new materials for the replacement of steel, but also steel for other materials, the latter requires us to redouble efforts.

He Wenbo shared a set of data: it is estimated that by 2025, steel demand will reach 870 million tons, crude steel demand will reach 910 million tons, crude steel production will reach 950 million tons; By 2030, the demand for steel will reach 830 million tons, the demand for crude steel will reach 860 million tons, and the output of crude steel will reach 900 million tons. By 2035, steel demand will reach 790 million tons, crude steel demand will reach 820 million tons, and crude steel production will reach 850 million tons.

"It's a natural thing to go down, but the experience will certainly be uncomfortable, there will be an adjustment process, and you can't imagine finding a way to comfortably navigate the transition." How to live a good life depends on our ability." He Wenbo said that, as we can see, the reason why the Steel Association has put forward one work project after another is to try to explore a method and mechanism that is helpful to the industry as a whole. Whether it can be effective depends on our joint efforts. "So since last year, the industry has proposed bringing quality standards back to the center of the industry." He stressed that the standard work is crucial, "the standard is the variety, the standard is the quality, the standard is the brand."

In response to the issue of steel exports, He Wenbo made it clear that it is the consensus of the industry to encourage high value-added exports, for which the Steel Association is continuing to work. "But under the strong constraints of China's current resources and environment, a high proportion of exports of ordinary products is unwise, is not worth the loss, is not in line with the industry's own interests, should be restricted and limited, and must be changed next year." "He stressed.

Third, effective growth is an inevitable requirement for high-quality development, and it is necessary to consider accelerating the introduction of carbon constraints and reassessing the actual utility of "capacity" itself in the work of "capacity governance".

"We are determined to control production capacity, but there is a lot of knowledge about how to control production capacity." He Wenbo said that at present, due to the continuous accumulation of various regulatory effects, there are too many interests bound and attached to the "production capacity", whether it is for enterprises or for local places, holding capacity seems to be holding interests. "Under this mechanism, who will part with the capacity assets that represent huge interests? (In recent years, iron and steel production capacity indicators add up to nearly a thousand yuan per ton, 10 million tons is 10 billion yuan), as an enterprise, spend a huge amount of money to obtain the capacity of what is the reason not to fully play it? Is there any reason to design a furnace that makes it smaller and not bigger? Even our incentive mechanism for promoting joint restructuring rewards capacity. Regardless of whether there are irregularities or not, it is time for the mechanism itself to be carefully studied and fully evaluated." He believes that a change in "governance innovation" is urgently needed.

"The way you can think of is to accelerate the introduction of carbon constraints. Under this regime, even if the market requires it, it is up to you how much capacity you are prepared to use to produce what you are allowed to produce relative to the emission rights." He Wenbo said that it can be believed that the environment is social, and the production capacity is its own. It can be expected that when a series of complex interest relationships attached to the production capacity are stripped, the production capacity data will be removed from the "burden" and return to the natural state.

He Wenbo stressed that COP28 (the 28th United Nations Climate Conference) held in the United Arab Emirates in December has just concluded, and China's climate envoy said that China will speed up the transition from dual control of energy consumption to dual control of carbon emission in the carbon-oriented mechanism. Predictably, the steel industry will either be proactive or reactive. With the current foundation and strength of China's steel, including the actual needs of its own industry governance, becoming the main force and pioneer of carbon reduction in China's various industries is a wise and necessary choice for China's steel industry.

He Wenbo believes that in terms of the status quo of the industry, the effective interaction between the effective market and the government is essential, you can choose from the details to the border, the management is not the capacity of which equipment is how much, but first to manage the total entrance, manage the "ceiling". He further explained: "Specifically, the blast furnace should not be built again, no matter what the reason, do not build again." If there are specific issues, deal with them specifically. In short, don't build any more."

He Wenbo explained that, first of all, based on the reality that steel production has reached the peak, steel production capacity is enough. Secondly, the purpose of capacity replacement, equipment update and regional layout has been achieved through the continuous production capacity replacement for many years, and the task of large-scale blast furnace has been completed, and there is no need to build a new blast furnace. Finally, as the carbon reduction process of the steel industry accelerates, the short process of the electric furnace and the third process using the new reduction mechanism gradually enter the commercial application, the original blast furnace equipment will be gradually withdrawn.

"Of course, it must be emphasized that China's existing blast furnace system is still in service for a long time, and it is imperative to transform the blast furnace low carbonization, and both the emission reduction of tons of steel and the total emission reduction are far greater than the electric furnace system, but if the new blast furnace will continue to cast a historic loss of assets." He Wenbo said.

"Only by managing the total entrance can the existing capacity be effectively integrated." Once new capacity is no longer coming in, or it is believed that it is not going to come in, then consolidation of existing capacity will be predictable and will start in earnest." He Wenbo believes that there will be a far-sighted and powerful integrator to enter the market, whether it is the product market, the capital market, the capital market will respond, because the long-term demand of the Chinese economy for the steel industry is obvious. Once the production capacity boundary is clear, through the integration of existing production capacity, and then through the reduction of production capacity to obtain integration benefits, it will be a rational choice for integrators to obtain scale benefits through market-oriented ways, which will open up a new world of integration and restructuring of the steel industry.

"Jumping out of the cycle of production capacity governance and identifying the boundaries of production capacity governance, China's steel is likely to rely on market-oriented governance with Chinese characteristics to minimize the impact and damage caused by the decline in total demand on the industry." He Wenbo believes that this is not enough, but also let the strategic decision to build a national unified large market really land, unblock the inter-provincial flow mechanism and channel of factor resources (such as the current energy dual control index), within the limited industry capacity governance boundaries, let the conditional and willing operating entities free hand and foot, barrier-free implementation of cross-regional resource restructuring and business integration within the group. Concentrate the controlled resources on the advantageous production lines within the group, shut down inefficient and ineffective capacity, and substantially improve the overall capacity utilization rate. "That's the way to go around the world when demand peaks." 'he said.

"If we can make a breakthrough in the three aspects of removing the interest relationship added to the production capacity, controlling the border and dregging the flow of factor resources, the development prospect of China's steel will be expected and predictable, and the unique advantages of China's unique socialist market economic system will surely show a convincing charm." He Wenbo said.

Fourth, no matter how many clever ways to reduce steel carbon, vigorously promoting the recycling of recycled steel is always the first choice.

Data show that from 2011 to 2022, China's steel accumulation continues to rise, but the consumption of scrap steel in the past three years has declined year by year. "The use of scrap steel is no longer growing or even declining, so what's the problem?" He Wenbo believes that "if it is a policy issue, what policies are needed should be given." According to the Scrap Association, every additional 10 million tons of scrap used (accounting for less than 5% of current annual recycling) will replace 16 million tons of iron powder and reduce 16 million tons of carbon dioxide emissions. The goal must first be set, and the existing steel renewable resources must be fully recycled. The policy should be set according to the goal, if the goal is important, any policy can be given. High-quality development is the absolute truth, which is an important proposition put forward by the Central Economic Work Conference. Where is it hard? Hard on results orientation. To solve the problem of recycling steel, it is necessary to systematically plan, target management and promote the whole.

Fifth, the excellent characteristics of steel materials are far from being fully developed and utilized, and there is unlimited space for material upgrading and material replacement, and there is a long way to go.

"The excellent characteristics of steel materials are mainly reflected in the excellent cost performance and unique recyclable characteristics." "This is a consensus that is far from being a real consensus, a consensus that is far from being action-based, a consensus that requires more industry action [rather than corporate action] and cross-industry action," He said.

Taking steel structure as an example, he said that according to the data and forecasts of the China Steel Structure Association, the processing production of steel structure has doubled in the past seven years, and the future application of steel structure is expected to reach 200 million tons. In 2022, the national steel structure processing production capacity exceeded 100 million tons, reaching 101.4 million tons, while in 2015 it was only 50 million tons, and the steel structure has huge space for expansion. At the same time, the steel grade used in steel structure is still mainly Q235 and Q355, accounting for about 78% of the total, while high-strength steel such as Q390, Q420, Q460 only accounts for about 10%, and the material application grade has great room for improvement. "This increase directly means lower costs and lower carbon emissions." 'he said.

"If we can introduce carbon orientation as early as possible, actively promote carbon pricing, the formation of carbon assets, the implementation of carbon trading, so that the whole life cycle evaluation really into the building green evaluation system, there is no doubt that it will be greatly conducive to the promotion of steel structure buildings, steel excellent cost-effective and unique recyclability will help accelerate the formation of green building system." He Wenbo said, "Now, we realize that the early introduction of carbon oriented mechanisms, whether it is to promote green buildings, or to promote the recycling of recycled steel, but also to incentivise the industry is creating.