Local to capacity impulse: data to fight for political achievements

Abstract As a key industry to resolve overcapacity, the steel industry has taken the lead in tackling the battle from the central to the local. The "First Financial Daily" reporter learned that the sum of the goals set by various localities has exceeded the target set by the central government. The coal industry has a similar situation. ...
As a key industry to resolve overcapacity, the steel industry has taken the lead in setting off a tough battle from the central to the local. The "First Financial Daily" reporter learned that the sum of the goals set by various localities has exceeded the target set by the central government. The coal industry has a similar situation.
A person familiar with the steel industry told this newspaper that the enthusiasm of the local government for industrial transformation and upgrading is relatively high, and it is a good thing to implement the capacity-reduction policy. However, the steel industry has a complicated background in terms of production capacity. Some local governments are rushing to “higher than” the production capacity target, which may result in a one-size-fits-all implementation process, which is not conducive to industrial development and social stability.
When talking about the reasons for setting high goals, the above-mentioned insiders speculated that it may be related to seeking more resettlement funds and policy concessions. He also said that it is necessary to guard against the disguise of production capacity and become another kind of performance competition, thus distorting the original intention of the policy.
Statistics from the National Bureau of Statistics show that the steel industry has rebounded in the first quarter. According to market analysis, this is due to the decline in post-holiday stocks and the impact of factors such as infrastructure construction and real estate recovery. In general, the surplus situation in the steel industry is still grim.

Local target super central
On February 4, the State Council promulgated the "Opinions on Resolving the Excessive Production Capacity of the Iron and Steel Industry to Realize the Development of the Depletion" (hereinafter referred to as "Opinions"). The opinion pointed out that on the basis of eliminating backward steel production capacity in recent years, starting from 2016, it will be 5 years. Time will reduce the crude steel production capacity by 100 million to 150 million tons. At the same time, the establishment of a special fund for the adjustment of industrial enterprise structure will be awarded for the resettlement of personnel in the process of de-capacity.
Subsequently, various departments intensively introduced implementation opinions. In the week of mid-April, the Ministry of Land and Resources, the Ministry of Human Resources and Social Security, the National Development and Reform Commission, the State Administration of Work Safety, and the three-party and other departments issued relevant documents.
At the same time, the local steel production capacity targets have appeared. According to media statistics, seven provinces including Guangdong, Zhejiang, Sichuan, Guizhou, Jiangsu, Chongqing, and Qinghai have introduced supply-side reform implementation plans, while governments in Shanghai, Anhui, Hunan, and Hubei have reviewed and implemented specific implementation plans. . From the perspective of the operation path, most of the local supply-side reforms have focused on “doing subtraction” on capacity.
It is worth noting that although the central government has set a target of 100 million to 150 million tons of steel production reduction, the sum of the local disclosures is far greater than this.
Taking Hebei as an example, Hebei's total steel production capacity is about 300 million tons, accounting for about 27% of the country's total production capacity, and it will eliminate 100 million tons of production capacity in the next five years. Jiangsu proposed that by the end of 2018, the steel production capacity would be reduced by 12.55 million tons. In addition, Guizhou, Liaoning and other provinces, the sum of the localities has exceeded the national target of 100 million to 150 million tons.
In addition to steel production capacity, Shanxi only plans to reduce coal production capacity by 258 million tons by 2020 during the two sessions this year; Hebei proposes to reduce production of 40 million tons of coal by 2017; Inner Mongolia said that it will close 280 in the next three to five years. The coal mine is involved in a production capacity of 120 million tons.
Recently, many provinces have clearly defined the goal of reduction in the implementation plan. Guizhou plans to compress coal mines by 70 million tons in three to five years; Jiangsu proposes to reduce coal production capacity by 7 million tons by the end of 2018; Chongqing's goal is to reduce coal production capacity by nearly 50% in two to three years. The pressure is reduced to less than 20 million tons.
Overall, the local pressure on coal production has also exceeded the national requirements. Only Shanxi and Inner Mongolia's exit capacity has already accounted for three-quarters of the country's overall target (the State Council requires three to five years to withdraw 500 million tons of capacity), and the sum of the above six provinces has exceeded 500 million tons.
However, some analysts believe that some provinces have recently shown signs of “reducing capacity without reducing production” in some industries. For example, some coal mines seem to reduce production capacity by several million tons, but the reduction is based on approved production capacity, not actual production. Even some insiders said that some coal companies contracted mining is only an expedient measure, if the market turns back, there are still plans to resume production. This is also a phenomenon that the steel industry needs to prevent during the process of capacity execution.
Concerning the "reduction of production capacity without reducing production", some officials commented on the "First Financial Daily" reporter that it is now in the early stage of capacity reduction, and is still in the stage of institutional breakthrough and rationalization. It will also drop. The source stressed that market demand is also an important factor to consider in the production capacity, and can not be a one-size-fits-all goal.
For the phenomenon of “data excitement” in local production capacity, people at the beginning of the meeting said that they should be vigilant. "In particular, it is necessary to prevent the rough handling or fraudulent congestion in the post-implementation process in order to complete the task." He said that the relevant documents of the central government have clear explanations on the direction of subsidies and subsidies.

Industry recovery is an illusion
On April 15, the National Bureau of Statistics released data. In March this year, China's crude steel, pig iron and steel production were 70.65 million tons, 60.2 million tons and 99.23 million tons, up 2.9%, 2.2% and 3.3% respectively. Among them, crude steel and steel production hit a record high in a single month. The average daily output of crude steel reached 2.279 million tons, a 12.9% increase from January to February, which is close to the historical peak level of 2.309 million tons in June 2014.
Since the beginning of this year, steel prices have gradually strengthened, and the sound of recovery has been heard. Many companies that have stopped production or reduced production have also reported resumption of production.
According to media reports, Haixin Iron and Steel Co., Ltd., located in Dongzhen, Wenxi County, Yuncheng City, Shanxi Province, was once the second largest private steel enterprise in China. After the merger and reorganization, it was renamed as “Shanxi Jianlong Iron and Steel Co., Ltd.”. In the context of market warming, the recent state of the old steel company will officially resume production on the 29th of this month.
However, in the eyes of industry analysts, the recovery of the steel industry is only a “seasonal” Xiaoyangchun, and the overall surplus is still the basic status of the steel industry in the future.
According to official data, China's crude steel output fell by 2.3% year-on-year, and steel consumption fell by 5.4% year-on-year.
Xu Shishuai, deputy general manager of Anshan Iron and Steel Co., said that the accumulated losses of the main business of China's steel enterprises last year exceeded 100 billion yuan. According to the data of China Iron and Steel Association, in 2015, the steel company of China Steel Association realized sales income of 2.89 trillion yuan, a year-on-year decrease of 19%, a loss of 64.5 billion yuan, a profit of 22.6 billion yuan in the previous year, and a loss of more than half.
According to typical examples, the net losses of five listed companies of Chongqing Iron and Steel, Maanshan Iron and Steel, Anshan Iron and Steel, Valin Steel and *ST Bayi Steel in 2015 reached 5.987 billion yuan, 4.804 billion yuan, 4.593 billion yuan, 2.959 billion yuan, 25.08. 100 million yuan. Baosteel also fell to its lowest profit level in 18 years, and its financial report showed that its net profit fell 82.51% year-on-year.
From the government level, the short-term recovery of the market has not shaken the determination to go to production capacity. The Hebei provincial government recently held a meeting and said that it must make a determination to continue to push hard to promote steel and coal to capacity, speed up the adjustment of structure, transformation and upgrading, and ensure that the first half of the time task is "double over half."
"Especially can't be taken lightly because of the warmth." An official from Shanxi said in an interview with the newspaper recently.
The test for local governments is that enterprises and localities will face difficult problems of attrition in the process of de-capacity.
According to public information, only WISCO and Angang have announced plans for layoffs in the next few years. About 50,000 people in WISCO and about 60,000 people in Angang need to make another living.
Zhao Chenxi, spokesman of the National Development and Reform Commission, said recently that starting from 2016, there will be 400,000 to 500,000 steel mill workers who need to be resettled in steel. In addition to personnel resettlement difficulties, bond defaults also plague steel enterprises, such as the 10 China Steel Bonds that have been repeated several times have not been paid.
In addition to the need to accommodate a large number of employees, industry insiders analyzed that fiscal and tax considerations will also affect the willingness of local governments to reduce capacity.
The opinions clearly pointed out that the use of special awards funds should be combined with the completion of local tasks (mainly linked to the exit of production capacity), the degree of difficulty, the situation of resettlement staff, etc., and the implementation of the ladder awards for local governments, which should be used by local governments to meet the requirements of enterprises. Staff placement.

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