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The national industrial capacity utilization rate continues to improve.
Release time:
2021-11-21
With the steady progress of capacity reduction and the accelerated exit of outdated capacity, the supply and demand structure of the steel and coal markets has undergone profound changes, leading to a significant improvement in the quality and efficiency of industry operations.
Since the beginning of this year, various regions and departments have adhered to market-oriented and legal means, strictly implementing environmental protection, quality, safety, and other regulatory standards, achieving significant results in resolving excess capacity and eliminating backward production capacity. With the steady advancement of capacity reduction, backward production capacity is accelerating its exit, leading to profound changes in the supply and demand structure of the steel and coal markets, and significantly improving the quality and efficiency of industry operations.
Data recently released by the National Bureau of Statistics shows that in the first half of this year, as structural capacity reduction continues to deepen, the national industrial capacity utilization rate was 76.7%, an increase of 0.2 percentage points from the first quarter and 0.3 percentage points from the same period last year.
The increase in industrial capacity utilization is related to the stable operation of the macro economy and is closely related to China's continuous promotion of supply-side structural reform. As one of the five key tasks of supply-side structural reform, capacity reduction is key to achieving sustained and stable economic growth in China. Since the beginning of this year, various regions and departments have adhered to market-oriented and legal means, strictly implementing environmental protection, quality, safety, and other regulatory standards, achieving significant results in resolving excess capacity and eliminating backward production capacity.
Experts have stated that with the steady advancement of capacity reduction and the accelerated exit of backward production capacity, profound changes have occurred in the supply and demand structure of the steel and coal markets, and the quality and efficiency of industry operations have significantly improved.
Promoting the resolution of excess capacity
The Central Economic Work Conference held at the end of last year clearly proposed that around high-quality development, it is necessary to deepen supply-side structural reform, vigorously eliminate ineffective supply, and treat the disposal of 'zombie enterprises' as an important focus to promote the resolution of excess capacity.
According to the arrangements in the 'Government Work Report', in 2018, China will further reduce steel production capacity by about 30 million tons, exit coal production capacity by about 150 million tons, and eliminate and shut down coal-fired power units below 300,000 kilowatts that do not meet standards. Efforts will be increased for the bankruptcy liquidation and restructuring of 'zombie enterprises', and proper arrangements for employee placement and debt disposal will be made.
In April of this year, the National Development and Reform Commission, together with relevant departments, jointly issued the 'Notice on Doing a Good Job in Resolving Excess Capacity in Key Areas in 2018', clearly stating that the goal of reducing crude steel production capacity by 150 million tons during the 13th Five-Year Plan period should be basically completed; ensuring that the target of reducing coal production capacity by about 800 million tons is achieved within three years.
Yan Pengcheng, spokesperson for the National Development and Reform Commission, introduced that since the beginning of this year, in the coal sector, relevant departments have urged and guided local systems to sort and summarize the disposal of 'zombie enterprises' since 2016, listing names, formulating plans, conducting comprehensive inspections, and reporting results. At the same time, efforts to eliminate backward production capacity have been accelerated, and the exit standards for coal mines in southern regions have been appropriately raised, gradually increasing or eliminating production capacity through strict law enforcement, closing some, implementing capacity replacement for others, and upgrading a small number.
In the steel sector, relevant departments are promoting the implementation of annual capacity reduction targets, confirming the plans for reducing crude steel production capacity reported by various regions for 2018, and ensuring that backward production capacity that does not meet standards and does not comply with industrial policies exits in accordance with the law through regular strict law enforcement and mandatory standard implementation, ensuring the completion of annual target tasks. Strengthening the consolidation of capacity reduction results, maintaining a high-pressure stance to address issues as they arise, strictly prohibiting new capacity, preventing the resurgence of 'ground bar steel' and the re-production of already resolved excess capacity, and ensuring strict control over steel capacity replacement and project filing to prevent 'capacity reduction and increase'.
According to reports, from the end of May to mid-June this year, relevant departments also jointly dispatched inspection teams to 21 provinces including Tianjin, Hebei, Shanxi, Inner Mongolia, and Liaoning to conduct special inspections on resolving excess capacity in the steel industry and preventing the resurgence of 'ground bar steel'.
Industry benefits have improved significantly.
With the solid advancement of work to eliminate excess capacity and dispose of 'zombie enterprises', ineffective and low-end supply of steel and coal has significantly decreased, the supply structure has improved significantly, and capacity utilization has rebounded.
Data released by the National Bureau of Statistics shows that in the first half of this year, the national industrial capacity utilization rate was 76.7%, an increase of 0.3 percentage points from the same period last year. Among them, the national industrial capacity utilization rate in the second quarter was 76.8%, rebounding 0.3 percentage points from the first quarter.
By industry, the capacity utilization rate of coal mining and washing industry in the second quarter was 72.9%, rebounding 1.7 percentage points from the first quarter; the capacity utilization rate of black metal smelting and rolling processing industry was 78.5%, rebounding 1.6 percentage points from the first quarter.
With the solid advancement of capacity reduction-related work, the overall supply and demand in the coal industry has performed well. Wang Xianzheng, president of the China Coal Industry Association, stated that in the first half of this year, the raw coal output of large-scale coal enterprises nationwide was 1.7 billion tons, a year-on-year increase of 3.9%; net coal imports were 144 million tons, a year-on-year increase of 12.6%; preliminary estimates indicate that the national coal consumption was about 1.89 billion tons, a year-on-year increase of 3.1%, achieving a basic balance between production and demand.
More importantly, with the advancement of coal capacity reduction, the approval of new coal mines and the intensity of capacity replacement have increased, and a large number of large modern coal mines have been gradually put into operation, steadily improving the quality of the coal supply system, which has further driven the continuous improvement of coal industry benefits.
In the steel industry, with the advancement of capacity reduction, the supply and demand of the steel industry has shifted from severe excess to relative balance, and the capacity utilization rate of the steel industry has gradually recovered.
Data released by the National Bureau of Statistics shows that in June of this year, the national output of pig iron, crude steel, and steel products was 65.88 million tons, 80.20 million tons, and 95.51 million tons, respectively; the average daily output of crude steel nationwide was 2.6733 million tons, setting a new historical high.
With the improvement of market supply and demand, steel prices have rebounded, and market benefits have improved. Qu Xiuli, vice president of the China Iron and Steel Industry Association, stated that since the beginning of this year, the domestic macro economy has been stable and improving, steel production has been generally stable, advantageous capacity has been released, the overall balance of supply and demand in the steel market has been maintained, steel prices have fluctuated, and the benefits of the steel industry have continued to grow.
The task of capacity reduction remains arduous.
Since 2016, various regions and relevant departments have solidly promoted the resolution of excess capacity in the steel and coal industries and the prevention of risks from coal and electricity capacity excess, achieving significant results, with a substantial improvement in the quality and efficiency of industry supply, a noticeable improvement in industry operation conditions, positive progress in industrial structure adjustment and layout optimization, effective regulation of market competition order, and gradual establishment and improvement of long-term mechanisms. However, as capacity reduction enters a critical stage, the challenges ahead are all 'hard bones to chew'.
Wang Xianzheng stated that a comprehensive analysis shows that the current national coal mine capacity is about 4 billion tons per year, with about 1.1 billion tons of coal mines under construction and expansion, and about 250 million tons imported. Compared to the national coal consumption, the situation of coal capacity excess has not changed.
This also means that our country will continue to promote the work related to coal capacity reduction. "Controlling the disorderly expansion of coal production capacity, managing the pace of coal resource development, and resolutely eliminating backward production capacity are important aspects of the structural reform on the supply side of coal. It is an inevitable choice for the coal industry to achieve high-quality development," said Wang Xianzheng. He stated that in the process of firmly eliminating backward production capacity and resolving excess capacity, advanced production capacity should be released in an orderly manner, optimizing the coal supply structure, improving the quality and efficiency of national coal supply, and providing reliable energy support for national economic and social development.
From the perspective of the steel industry, due to the accelerated release of crude steel capacity, production has reached a historical high, which may affect the supply-demand balance in the domestic market. Moreover, the phenomenon of reducing capacity while increasing production may also interfere with the progress of capacity reduction in the steel industry.
Qu Xiuli stated that currently, both social inventory and enterprise inventory of steel in the domestic market are at relatively low levels, and close attention should be paid to the state of capacity release in the steel industry in the future to prevent market supply pressure from increasing too quickly.
Experts suggest that the steel industry should continue to reduce capacity, control production, stabilize the market, improve product variety, enhance quality, focus on environmental protection, reduce leverage, lower costs, and ensure benefits, further promoting the structural adjustment and transformation of steel enterprises.
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