Analysis of scrap industry development dilemma

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Source: Date:2015-05-16

October 26th Shagang increases scrap purchase price of 100 yuan / ton, the price adjustment to a sudden and violent, so many people look forward to the joy of spring steel. But the market seems to be not as expected to turn a reversal of a strong rise in the substantial price adjustment is like throwing a stone in the water, only the risk of a bubble, did not see the water. Scrap low-spirited, so many businesses engaged in scrap has lost its future.
Over the past 10 years, the rapid growth of China's crude steel production has continued to expand the amount of iron and steel in China, by the end of 2014, China's iron and steel savings will be close to 70 tons. According to the relevant data show that in 2013, China's scrap resource production has reached 1.6 tons, accounting for 27.5% of the global production of scrap. Every scrap a period of 8-30 years, can be recycled, is indispensable in modern steelmaking raw materials of iron and steel industry, has the advantages of energy saving and emission reduction. Each with 1 tons of scrap steel, can save 1 tons of standard coal, reducing 2-3 tons of iron ore mining and 4-5 tons of primary ore mining; with iron ore steel saving 60%, saving 40% of waste steel ratio, reduce waste emissions, emissions of waste water and 76% 86% 97%. The scrap is an important guarantee for green development of iron and steel industry.
Whether it is from the cycle of economic development or social supply and demand, scrap should be of a sunrise industry, but the reality is that the current steel production capacity of about 700 million, iron ore production capacity of about 1 billion, steel production capacity is only 160 million. In 2012, scrap consumption reduced to 117 kg / ton, 2013, scrap steel consumption and reduced to 110 kg / ton, low scrap ratio remained at around 10%. The downstream timber no room to rise, many steel enterprises directly out of scrap, not disabled is also cut the amount of scrap or lower scrap purchase price, strictly control the cost of steelmaking. Scrap always can not account for the dominant position, the price is lower.
So the question is, what is the reason for the scrap of this embarrassing situation?
Serious excess capacity is certainly the most important point. Even in the real estate industry a few years ago, the rapid development of iron and steel has also shown signs of excess production, but then there is no sharp outbreak of conflict. And now the real estate industry is not booming, less investment in real estate business, steel production is high, a serious imbalance between supply and demand, steel prices also fell down to 1.6 yuan / kg of cabbage price. As scrap steelmaking raw materials natural could not escape. One disaster after another is, since this year, scrap fell 20%, a decline of 35% ore, ore prices fell again and again to refresh the record low, the production cost of hot metal in blast furnace is also declining. Which belongs to the cold scrap material, the steel is much higher than the cost of hot metal in steelmaking, the price is not dominant. Iron and steel industry earnings difficult circumstances, for the blast furnace of large steel mills, steel prices are more inclined to use molten steel.
Policy, fiscal constraints. Although all know the short process of electric furnace steelmaking both environmental protection and energy saving, but China's indiscriminate steel flow into the restricted industries, short process can not enjoy the preferential price, many enterprises have to use electric technology to build up the production of blast furnace hot metal, reducing the amount of scrap is the main direction of electric current converter. Since 2011, the state ceased preferential tax policies for comprehensive utilization of waste iron and steel industry, to be paid in full 17% VAT emerging scrap steel processing enterprises, in line with the national development of circular economy enterprises do not get policy support, the industry has not yet standardized competition, lack of competitiveness, the market situation is slightly uncertain risk. Followed.
Disorderly competition in the market. Different enterprises acceptance of scrap prices, there are a large number of small and medium frequency induction furnace steel, the steel with low cost, and can accept the relatively high price of scrap. This price is very difficult to attract major steel enterprises use scrap. Scrap processing market is no uniform price reference, acquisition criteria and tax guidance, exacerbated by the scrap resources closure phenomenon, difficult to manage market confusion, curb the scrap industry healthy and orderly development.