2020 is a watershed in an era.
This year, China's crude steel production exceeded 1 billion tons mark, reaching 1.065 billion tons, an increase of 5.2% over the previous year, accounting for 56.7% of the global crude steel production, accounting for half of the global steel industry, and 10 times the steel production in India, which ranks second in the world in steel production. This is a new height that major steel producing countries such as Britain, the United States, Japan and Russia have not reached in history.
Before 2020, China's steel industry has been making rapid progress and has been rising to one high after another. In 1996, when China's steel production exceeded 100 million tons, the Secretary-General of the Japan Metallurgical Iron and Steel Alliance predicted that China's steel production limit was 200 million tons, because in the history of global steel industry development, no country's steel production exceeded 200 million tons, and China is no exception.
But China's steel industry has developed magnificently over the past 20 years, far exceeding the imagination of Japanese steel experts. China's steel output not only exceeded 200 million tons historic, but also created a historic high of 1.065 billion tons of crude steel in 2020. This super-large steel output is enough to shock the world.
Turnaround begins in 2021. This year, China's steel industry began to strategically reduce the capacity of . Relevant departments in China organized a nationwide "look back" inspection on steel capacity reduction and crude steel output reduction work. At the same time, they adjusted the steel export tax rebate policy, giving priority to ensuring the stable supply of domestic steel and ensuring the year-on-year decline in national crude steel output in 2021. In 2021, China's crude steel production was 1.03 billion tons, a decrease of 35 million tons from the previous year, a year-on-year decrease of 3%, reversing the continued growth of China's crude steel production for many years.
At the end of the same year, the Ministry of Industry and Information Technology issued the "14th Five-Year Plan for Raw Materials Industry Development" and further clarified that the production capacity of bulk products such as crude steel will only decrease but not increase in 2025. The introduction of this policy further determined that China's steel has entered an era of stock or reduction development.
Several years later, when we look back at the history of China's steel industry development, we will find that 2020 is an insurmountable high point in China's steel production. From then on, China's steel industry began to enter the era of stock development.
The so-called era of stock development of the steel industry means that China's steel industry no longer pursues the improvement of scale energy level, but is based on existing production capacity, and through internal structural adjustments, it will increase the concentration of the steel industry and continuously climb to the high end of the steel industry chain to achieve high-quality development of China's steel industry.
In the era of stock development, China's steel industry will accelerate its upstream development and change the iron ore resource supply pattern of China's steel industry by increasing control over iron ore resources, thereby solving the "bottleneck" problem of resources. This is of great significance to China.
In the past 20 years, China's imported iron ore accounted for more than half of the global iron ore trade. China's iron ore imports are the second largest import commodity after crude oil. In 2021, China's iron ore imports were 1.2 trillion yuan, accounting for 7% of China's total imports of 17.4 trillion yuan.
At the same time, more than 80% of the iron ore imported by China comes from Australia and Brazil, among which more than 60% of the iron ore is imported by Australia.
Due to the excessive concentration of iron ore source structure, coupled with the excessive demand for iron ore in the era of China's incremental steel development, and the low concentration of China's steel industry has caused China's steel to be unfavorable in international iron ore price negotiations.
Iron ore not only has production attributes, but also financial attributes. International capital with a sensitive sense of smell has controlled global iron ore resources early on and continues to hype and make huge profits from it.
In the first half of 2021, international iron ore prices soared, reaching a record high of more than 1,600 yuan/ton, seriously squeezing the profit margin of China's steel.
Faced with an unfavorable situation, China has unswervingly implemented the dual control policy of capacity and output of "de-capacity and control output", which directly led to a decrease in the amount of imported iron ore, which in turn led to a plummeting iron ore price. In just half a year, iron ore fell to a low of 560 yuan/ton.
Practice has proved that the reduction in crude steel production has changed the market expectations of rising iron ore prices to a certain extent, curbing the soaring price of imported iron ore, and is conducive to the high-quality development of China's steel industry.
At the same time, China Steel launched the "Basestone Plan" to accelerate its entry into the field of iron ore resources and ensure the security of China's steel supply chain.
Latest three major actions have been taken:
First, accelerate the layout of domestic iron mines. The most iconic event is that the Anshan Iron Mine Project in the West Anshan Iron Mine Project was started, which marked the official start of construction of the largest single underground iron mine in the country. Xi'anshan Iron Mine retains resource reserves of 1.3 billion tons, with an annual iron ore production of 30 million tons and an annual iron concentrate of over 10 million tons. It is planned to be put into production in 2027.
The second is to increase the layout of Australian iron ore. China Baowu and Rio Tinto established an joint venture for the Xipo iron ore project in Pilbara, Western Australia. Baowu and Rio Tinto also reached an iron ore procurement agreement. Baowu will purchase Rio Tinto's total iron ore products with a total of 126 million tons according to the equity ratio, and purchase about 11.5 million tons per year. The design production capacity of the Xipo project is 25 million tons/year, with an average grade of about 62%. It is planned to start construction in early 2023 and be completed and put into production in 2025.
The third is to firmly advance into the African iron mines. China Baowu and Win Alliance Ximangdu Holdings Company on the northern block project of the Simangdu iron mine in Guinea marks that China Baowu’s official entry into the Simangdu northern project. The Ximandu Northern Project is the largest undeveloped iron ore deposit discovered in the world, with the project's high-grade iron ore resources expected to exceed 2 billion tons. With full production reaching, the Simandu project can export about 100 million tons of iron ore every year. Ximangdu iron ore is a rare high-grade iron ore worldwide. Its reserves are sufficient to leverage the global iron ore supply pattern, which has great potential to break the price monopoly of international mining giants.
In the era of stock development, China's steel accelerates the pace of industry transformation and upgrading, guided by digital transformation, guided by the dual-carbon strategy, take the path of low-carbon metallurgy, and build green, intelligent and global steel, thereby helping China's manufacturing industry transform and upgrade.
The advent of the global digital era has brought the economic and social development to an accelerated trend. All industries have suffered an unprecedented huge impact, and all industries are facing new challenges of redefinition.
How does the steel industry look to the future? How will steel surpass the operation of traditional steel enterprises in the future? This is a timely issue that can test the imagination of entrepreneurs. When we are still limited to traditional thinking and unable to extricate ourselves, digital steel mills have already given the answer.
Smart manufacturing is one of the symbols of future modern steel mills. The rapid development of artificial intelligence (AI) technology based on big data provides technical possibilities for realizing smart manufacturing. China's steel companies must actively embrace AI technology and sensitively realize that smart manufacturing is the general trend of future steel development, and build a world-leading smart steel factory.
In the future, steel will realize smart steel plants, and realize analysis, reasoning, judgment, conception and decision-making through a human-machine integrated intelligent system composed of intelligent machines and experts. It updates the concept of manufacturing automation to expand to flexibility, intelligence and highly integrated.
Artificial intelligence technology will reshape the future thinking and organizational structure of steel enterprises and make disruptive innovations in traditional production management and operation methods.
Smart manufacturing is not only basic automation upgrade and transformation and centralized monitoring of production systems, but also poses new challenges to the traditional production organization model, supply chain management, and business model.
This includes, vertically, promoting flat management, reducing management levels, and achieving institutional streamlining. Horizontal, from division of labor to compounding, one person has multiple positions, one position has multiple abilities, expand management scope and achieve efficient personnel. Through Internet technology, enterprises are more open and an interactive ecosystem is formed between enterprises.
The future steel is a low carbon steel factory.China has determined that by 2025, the industry's R&D investment intensity will reach 1.5%, the production equipment digitization rate will reach 55%, and 80% of the steel production capacity will complete ultra-low emission transformation, the steel industry will utilize scrap steel resources to more than 300 million tons, and the number of key steel materials will exceed 5 each year.
According to this plan, the future China Steel Company will have more technological content, green elements and smart factors. It is not only a steel company, but also a technology company. In the future, China Steel Company will surely climb to both ends of the smile curve, strive to occupy the highest point of the steel food chain, and continuously achieve transcendence and breakthroughs in the mid-to-high-end steel field.
In the era of stock development, China's steel will accelerate the pace of internal structural adjustment, and through strategic restructuring, it will accelerate the increase in the concentration of China's steel industry, strive to climb into the mid-to-high-end steel field, and build a world-class steel enterprise.
Although China ranks first in the world in steel production, its concentration in the steel industry is inferior to that of the world's major steel-producing countries. The crude steel output of a Korean Posco Iron Manufacturing company accounts for 65% of the country's total; the crude steel output of four Japanese steel companies accounts for 75% of the country's total output; the crude steel output of the top 4 EU accounts for 73% of their total output; the crude steel output of the top 4 US steel companies accounts for 65% of their total output.
At the end of 2020, the crude steel output of China's top 10 steel enterprises accounted for 38.8% of the country. Angang and Baowu merged to count, and the output of the two major steel companies only accounts for about 20% of China's steel production. Obviously, China's steel concentration is still far from the world's major steel production, and we still have a long way to go in the future.
In the past, China's steel industry was too dispersed and was easily divided and disintegrated by the iron ore giants in negotiations with the iron ore giants, thus putting China's steel industry in a disadvantaged position. A large amount of profits were shared by the iron ore giants.
Currently, with Baowu and Angang as the leading enterprises in China, the implementation of strategic restructuring has accelerated the pace of concentration of China's steel industry and will help China build a world-class steel enterprise.
As China's steel industry concentration increases, China's voice in negotiations with international iron ore giants is also increasing.
According to the "14th Five-Year Plan", by 2025, more than 40% of the output will be concentrated in the top 5 steel enterprises, and more than 60% of the output will be concentrated in about 10 large groups, including 3-4 super-large steel enterprises with 80 million tons and 6-8 super-large steel enterprises with 40 million tons, thereby increasing the concentration of the steel industry as a whole.
is not only a growth in quantity, but also an improvement in quality. China in the era of stock development is moving from a big steel country to a strong steel country. China has established the world's most complete and largest steel industry system with the world's industrial chain, providing the world's most abundant and complete steel products.
China is achieving a curve in high-speed rail, high-end electrical steel , automotive steel, high-performance long-term pipeline steel, aviation high-strength steel, oriented and non-oriented silicon steel , hand-teared steel, marine steel, aircraft carrier steel and other products. Among the 22 major steel products, the self-sufficiency rate of 19 categories reaches 100%, and the other 3 categories exceeds 98.8%, providing China's strong manufacturing industry with stable and safe industrial raw materials.
In the era of stock development, China's steel will make breakthrough progress in more mid-to-high-end steel fields, and strive to occupy the highest point of the global steel value chain. China will move from a big steel country to a strong steel country. This process has twists and turns, fierce games, and huge challenges, but it will eventually usher in a stunning highlight moment.
