Not long ago, the China Enterprise Confederation and the China Entrepreneurs Association released... 2015 Chinese enterprises 500 Strong ” In the ranking, according to statistics, there are a total of 50 A Chinese steel company has made the list. In fact, this number of companies selected is the lowest in a decade. 2014 Year and 2013 The years are: 51 Home and harmony 54 Home. This also reflects a trend in the steel industry’s performance over recent years.

　　Overcapacity in the steel industry is not merely a problem specific to the steel sector itself; it is also a complex social issue currently facing China. The Central Economic Work Conference proposed... 2016 The five major tasks for the year are: reducing overcapacity, destocking, deleveraging, lowering costs, and addressing weak links. Placing “reducing overcapacity” at the top of the list underscores just how severe the current situation regarding capacity reduction has become.

　　According to data from the Prospect Industry Research Institute’s “Analysis Report on Mergers and Reorganizations and Investment Strategy Planning Trends in China’s Steel Industry”: 2014 Over the course of a year, the comprehensive steel price index has... 99.14 Dip to 83.09 Point, with a decline of 16.2% Enter 2015 This year, the downward trend has not only failed to slow down but has instead become even more pronounced, starting from the end of last year... 83.09 The price has dropped again. 6 At the end of the month 66.69 Point, with a decline of 19.7% 。2015 In the first half of the year, large and medium-sized steel enterprises included in the statistics achieved sales revenue. 1.5 Trillion yuan, down year-on-year. 17.9%; Loss from core business 216.8 100 million yuan, increased loss 167.68 100 million yuan.

　　The current overcapacity is mainly due to the following four reasons:

　　First, in recent years, China’s urbanization and industrialization have been in a period of rapid development, which has served as the fundamental driving force behind the rapid expansion of steel production capacity.

　　Second, in the process of China’s economic growth, although we have long ago proposed to shift from... “ Extensive growth ” towards “ Intensive growth ” Transformation is underway, yet this process has never been fully completed. In the past, the expansion of steel production capacity was aligned with extensive growth patterns. Once steel demand undergoes a phased shift, the issue of overcapacity will inevitably come to light.

　　Third, regulatory reasons. Influenced by local protectionism and the failure of overall capacity planning, a considerable portion of what is referred to as... has emerged. “ Statistical excess capacity ” This has exacerbated the problem of overcapacity.

　　Fourth, “ Zombie ” Enterprises are reluctant to withdraw from production and also play a certain role in this.

　　 “ Zombie ” The primary reason enterprises are reluctant to exit is that steel production is a capital-intensive industry with high fixed costs. Once they withdraw, most of their costs would be lost in vain, prompting some companies to prefer staying put instead. “ Stove闷 ” They are also reluctant to completely withdraw, even when their capacity is idle or underutilized. Meanwhile, against the backdrop of overall overcapacity, the steel industry—as a key sector subject to regulation—faces significant challenges in finding funding for those capacities that lack distinctive product features and market advantages. “ Takeover Hero ” The integration and consolidation of resource assets are quite challenging, leading to a paradox: in good times, companies are reluctant to integrate; in bad times, they find themselves unable to do so.

　　In addition, some enterprises were once the primary source of tax revenue for local governments. Certain local governments have maintained these enterprises in a state of inefficient operation by coordinating relevant resources. The 13th Five-Year Plan. ” In the planning process, addressing overcapacity will be a key priority; however, the issue of excess steel capacity will be difficult to eliminate in the short term. The severe overcapacity in the steel industry is already a reality, and right now, the most important task is how to minimize losses from this excess capacity.

　　To minimize losses from excess production capacity, it is essential to mobilize efforts from multiple parties and adopt a multifaceted approach. First, we must accelerate the pace of phasing out outdated production capacity by employing a range of measures—including industrial standards, hydropower and electricity prices, environmental protection thresholds, and tax policies—to reduce the stock of obsolete capacity and prevent such capacity from evading elimination through simple expansion. Second, we should intensify mergers and restructuring efforts to increase industry concentration and scientifically determine which new capacity projects should be launched. Additionally, we can also integrate... “ The Belt and Road ” Through capital and trade linkages, the strategy aims to absorb excess production capacity in broader markets. By tapping into these countries’ markets, not only can we effectively digest the overcapacity, but we can also buy valuable time for the industry to undergo transformation and upgrading.

　　However, steadily reducing excess capacity in itself is not problematic, but it’s crucial to avoid... “ One-size-fits-all ” The policy has led to the industry. “ Shock-like ” For example, in the event of a shutdown, bank loans should be categorized accordingly. For enterprises that are genuinely lagging behind and lack competitiveness, risk warnings can be heightened; however, for manufacturing enterprises that are at an advanced level and have better market prospects, loan provision should be guaranteed.