The impact of phasing out outdated production capacity in both ferroalloys and steel


On July 25, the Ministry of Industry and Information Technology officially announced the list of the first batch of companies that eliminated backward production capacity in 19 industries in 2013. Among them, 184 ferroalloy companies eliminated about 1.943 million tons of backward production capacity, and the iron and steel industry eliminated ironmaking and steelmaking. The production capacity is 2.77 million tons and 6.979 million tons. The simultaneous elimination of outdated production capacity in the ferroalloy industry and the steel industry will have an important impact on the ferroalloy industry in many aspects.

Overcapacity in the ferroalloy industry exceeds 10 million tons

85% to 90% of ferroalloys in my country are used for crude steel smelting, and the production capacity and output of ferroalloys rank first in the world. In 2012, the output values of ferrosilicon and silicon manganese were 33 billion yuan and 70 billion yuan respectively. There is a big gap in the world's advanced level. The number and production capacity of ferroalloy enterprises have grown from more than 800 and 9 million tons in 2000 to more than 1,800 and more than 36 million tons at present. At present, the demand for ferroalloys in my country's iron and steel industry is only 24 million tons to 25 million tons, and the actual production capacity is about 1/3. At the same time, the distribution of ferroalloy production enterprises is scattered. The number of submerged arc furnaces with a production capacity of more than 25,000 kVA only accounts for 0.81% of the total number of submerged arc furnaces in the country; enterprises with a production capacity of more than 100,000 tons account for only 1.80% of the total, while the production capacity is 10,000. The number of enterprises below tons accounted for 50.10% of the total. Ferroalloy industry has large production capacity and low industrial concentration.

At the same time, my country lacks pricing power in iron ore, manganese, chromium and other raw materials in the steel industry, resulting in the import of raw materials being greatly influenced by the policies of major traders and exporting countries, and enterprises are under great pressure from rising raw material prices. Affected by the strict control of ferroalloy purchase prices by domestic iron and steel enterprises, it is difficult for ferroalloy enterprises to transfer the rising price of raw materials downward, and the operating pressure of enterprises continues to increase. Under the background that raw material mines cannot be self-sufficient, many domestic ferroalloy enterprises are often in a passive situation. Therefore, the ferroalloy market and enterprises are squeezed by both upstream and downstream, and the production and operation situation has always been in a difficult state.

The impact of phasing out outdated production capacity in both ferroalloys and steel

Ferroalloy production and sales are closely related to crude steel output, and there is a strong correlation between ferroalloy output growth rate and crude steel output growth rate, but ferroalloys fluctuate more and are obviously affected by the development cycle of the steel industry.

Usually, the production of 1 ton of crude steel requires 7 kg to 8.5 kg of ferromanganese, 1.7 kg to 2 kg of manganese ferrosilicon, 4.6 kg to 48 kg of ferrosilicon, about 4.0 kg of ferrochromium, and about 2 kg of other ferroalloys. With the scientific and technological progress of the iron and steel industry and the continuous deepening of the requirements for benchmarking, tapping the potential, reducing costs and increasing efficiency in recent years, the demand for ferroalloys in the iron and steel industry is generally declining year by year, and the demand for ferroalloys in the iron and steel industry is generally declining year by year. It was 0.26 tons per ton of steel, 0.257 tons in 2010, 0.241 tons in 2011, 0.229 tons in 2012, and 0.228 tons in the first half of 2013. In the steelmaking process of the steel industry, ferrosilicon, ferromanganese and silicon-manganese alloys are the three most commonly used ferroalloys, which are used for deoxidation, direct pre-deoxidation and alloying, respectively. In the past three years, the overcapacity in the steel industry has caused the steel market to remain sluggish. Many steel mills are carrying out benchmarking, potential reduction, cost reduction and efficiency enhancement activities. Among them, reducing ferroalloy consumption is one of the important indicators for cost reduction. Therefore, the overall downward trend of ferroalloy production and consumption in the steel industry is beyond doubt.

What effect and impact will the ferroalloy industry and iron and steel industry simultaneously eliminate outdated production capacity have? Industry experts believe:

1 reduction effect. The ferroalloy industry will eliminate a total of 1.943 million tons of production capacity this time, and the iron and steel industry will eliminate 6.979 million tons of steelmaking capacity. Based on the consumption of 0.228 tons of ferroalloy materials per ton of steel in the first half of 2013, the annual demand will be reduced by 1.592 million tons. In addition to the production capacity eliminated by the ferroalloy itself, the demand and production have decreased by about 3.535 million tons, which is equivalent to about 10% of the total production capacity of the ferroalloy industry, but reaches about 24% of the excess capacity. Therefore, although the problem of overcapacity in the industry cannot be completely solved, due to the simultaneous reduction of production and demand, it can have a greater inhibitory effect on the ferroalloy industry that continues to expand, so that it can clear its mind and restrain its desire for capacity expansion.

2 Decompression effect. The production of ferroalloys and the demand for iron and steel caused by the elimination of outdated production capacity are simultaneously reduced, and the demand for ore resources such as manganese and chromium is also objectively declining. This decline in demand will effectively restrain the price of ore from rising, and it will also bring a certain room for decompression to the market price of ferroalloy products, which is conducive to the simultaneous decompression of production and operation by both supply and demand. At the same time, the relationship between supply and demand has also undergone great changes. It is necessary to rebalance the ferroalloy industry and seek new cooperative relations from it, extend the industrial chain, and create some prerequisites for the sound development of production and operation in the later stage.

3. The effect of emission reduction and resource waste reduction. This time, the ferroalloy industry eliminated outdated production capacity, and about 138 outdated equipment represented by 6300 kVA submerged arc furnaces producing silicon-manganese alloy, ferrosilicon and silicon-calcium etc. were concentrated out, bringing the entire industry equipment and process technology to a new level , is conducive to energy conservation and emission reduction, reducing waste of resources, and is conducive to the industry to find a breakthrough or entry point to improve industrial concentration by using equipment level and production capacity as a platform, as a foundation, and as a link.