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Reigning dead ash of floor steel under high pressure can not resist the temptation of windfall profits

2019/9/23

ABSTRACT: Only half a month after the total ban, the "floor steel" has a trend of resurgence. According to the China Times, many small and medium frequency stoves in Inner Mongolia, Liaoning and other places have been opened secretly. At present, the net profit of IF furnace can reach 100,000-500,000 yuan a day. "Under the strict control of high pressure, they dare to take risks, which is entirely driven by rich profits."
This article is from Wall Street, by Zhang Jiawei. For more exciting information, please log on to wallstreetcn.com or download App from Wall Street.
June 30 is the last day of the deadline for the complete banning of "floor steel" in China. However, only half a month later, there are more news about the resurgence of "floor steel".
According to the report of the China Times, there is a trend of resurgence of "floor steel" all over the country. Among them, many small and medium frequency stoves in Inner Mongolia, Liaoning, Guangdong, Zhejiang and Sichuan have been opened secretly. Reported that the lure of profits up to 1,000 yuan/ton, smelting "floor steel" IF furnace in some places and desperately set up.
In the first half of this year, China banned and shut down more than 600 "floor steel" production enterprises, involving about 120 million tons of production capacity. On July 1, Shanghai Securities News quoted a number of industry insiders as saying that, except for a small amount of production capacity in obscure space, most of the production capacity of "strip steel" has been shut down and a considerable number of equipment has been dismantled.
However, the capacity expansion of legitimate compliance steel mills is limited, and the supply gap after the clearance of "floor steel" this year is difficult to fill, and the steel market as a whole is still in a situation of short supply and demand. A large number of in-situ bar steel consumption has shifted to regular threaded steel, resulting in high demand for threaded steel, which has also become an important driver of the surge in threaded steel since last month.
Since the beginning of June, threaded steel futures have shown a sharp trend, rising 500 yuan/ton to 3500 yuan/ton in 20 trading days, with a cumulative increase of 18% since June 1. In the spot market, threaded steel also rose synchronously.
The steep rise in steel prices has also made the profits of stolen "floor steel" soar. The China Times quoted the head of a steel plant in Tangshan, Hebei Province, as saying that the net profit of the medium frequency furnace in one day can reach 100,000-500,000 yuan, which is very profitable. The report quoted Xu Xiangchun, chief information officer of the iron and steel network, as saying, "Under the strict control of high pressure, they dare to take risks, which is entirely driven by rich profits."
The raw material of "bar steel" is scrap iron and steel, which is the scrap copper and scrap iron recovered from the market. The diameter and tensile strength of floor steel products are difficult to meet the national standards. Most of the products have brittle fracture and serious potential quality hazards.
The production of strip steel is mainly power frequency furnace, intermediate frequency furnace, etc., which can not be effectively controlled in production, and is currently classified as illegal and illegal production capacity. Most of the production locations are located in remote areas, rural courtyards or around steel mills (big steel mills as cover), easy to conceal, because there is no dust removal equipment, mostly choose haze day or night production.
As early as 1999, the term "strip steel" was expressed by the former State Economic and Trade Commission as "industrial frequency furnace for producing strip steel or open ingot", which appeared in the list of "backward production technology and equipment". However, the banning of bar steel has been repeatedly prohibited because of the complex interests entanglement.
On January 10 this year, the 2017 Board of Directors (Expanded) Meeting of China Iron and Steel Industry Association revealed that the whole country should eliminate all "floor steel" by June 30, 2017. Du Hui, an iron and steel analyst at China-Thailand Securities, commented that this was the first time that the ban had been made clear and that the ban on bar steel had risen to a political level.





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