Firstly, according to incomplete statistics, in 2015, the capacity of crude steel was 1.17 billion tons, an increase of 1.74% year-on-year; the production was 805 million tons, a decrease of 2.2% from the same period last year and the consumption was 704 million tons, down 4.7% year on year. Thus, the coefficient of utilization of crude steel was 68.8% and excess capacity was 101 million tons. In addition, it was estimated that the key steel enterprises have loss nearly 100 billion yuan, on average; the profit is below 120 yuan for per ton. The excess capacity is estimated to spend 3 - 5 years to digest, and the loss of large steel enterprises, have deteriorated the current recession of economy. It’s high time to take certain measures and policies; otherwise it will influence the process of industrialization and aggravate burdens for domestic economic development.
Secondly, with the introduction of national policies, local governments also take responsive measurements. Especially, in recent times, the stock market of steel and coal is rising rapidly which give stimulus and promotion to traditional industries. What’s more, phrasing out of some industries will make some enterprise withdraw from market and changes on production lines and structures. The reorganization and merger is the priority which may make more people become unemployed and that’s inevitable situation. The asset reorganization, personnel arrangement, products reconstruction and equipment treatment, all these will form a difficult situation that needs the county, government and steel enterprises to face. Therefore, it’s impossible for steel enterprises and market to grow rapidly in short times. The large excess capacity needs time to digests and the large companies also need times to adjust and reconstruct. At least for steel market in 2016, there still have to face the severe situation and turbulence.
Thirdly, what’s the direction for steel pipes
enterprise? Currently, the most serious problem in steel market is the redundancy of private steel enterprises with low end products also the uneven distribution of steel products and companies makes the significant centralization. In the future, the top priority is to reduce the private steel pipe enterprise and increase the production capacity and market share of large-scale enterprises. It’s unavoidable to eliminate the steel pipe companies with small scale, low-end equipment, and poor- quality products. If the market still maintain the present production mode, and focus on the straight carbon steel, the market will not make any progress, and left behind with the international market, even rely on the foreign market to get high-end products. More low-end products will fill the local market and eventually be wasted steel without any value.
Therefore, for steel pipes industry, in 2016, the market will be mingled hope and fear. The hope is due to the negative situation in 2015, the market will promote the adjustment of production structure and form a new pattern for steel pipe; besides, the new policies including The thirteenth Five-Year Plan and the Silk Road Economic Belt and the 21st-Century Maritime Silk Road will also enlarge the demands for pipes. The fear is that, the steel pipe industry has large production base and long sustained consumption time, with the heavy industrial shadow; it’s difficult to make advancement in a short time. In brief, the mainstream of domestic market is still in depression and the rebound ability is incapable to withstand the downward tendency.