In his keynote address at the 52nd annual meeting of worldsteel (World Steel Association) held in Tokyo, Dr. Yu Yong, chairman of Tangshan-based HBIS Group Co., Ltd (formerly Hebei Iron & Steel Group), China’s second-largest iron and steel producer and the third largest in the world, first pointed to the favorable economic situation in China and the sustained momentum of China’s economic growth, with Chinese GDP having risen by 6.8 percent in the first half of the current year.
Turning to the issue of steel capacity reduction, he said that China has more responsibility in this process because it accounts for 50 percent of total global capacity, though he added that all countries are faced with this issue. He continued by saying that capacity reduction in China has contributed to large-scale economic changes, it being part of China’s shift from scale and quantity to quality, and therefore it is the result of economic development in China. In economic terms, it marks a shifting from quantitative to qualitative development, he stated. China, Dr. Yu stressed, is determined to reduce overcapacity, as this advances the transformation and upgrading of the Chinese economy. He recalled that in 2017 China had eliminated a total of 120 million mt of obsolete capacity, while substandard capacities were fully banned by the Chinese government in the first half of the same year. In addition, he said, China aims to eliminate 30 million mt of steel capacity in 2018 and so it will meet its total output reduction target of 150 million mt two years ahead of the original schedule. This eliminated capacity is bigger than the entire capacities of some countries, he remarked.
Generally speaking, Dr. Yu stated, economic quality in China has been developing quickly due to supply-side reforms. The result has been high-quality growth, a shifting from the old economy drivers to new ones, capacity reduction in other industries in China besides steel, and dramatic changes in Chinese economic patterns.
Commenting on the healthy steel demand in China, he stated that in 2017 the increase of steel demand in the country accounted for 80 percent of global growth in steel demand, while this demand for steel in China also drove healthy demand for raw materials, with China importing a total of 1.08 billion mt of iron ore in the given year.
Dr. Yu went on to say that it is very important for Chinese steel companies to shift their paradigm in order that they can focus on customization and high-end products. He also affirmed that they are facing severe pressure from the environmental side. He stressed that low-carbon development is key to achieving high-quality development and asserted that Chinese companies are committed to meeting the increasing environmental standards. The Chinese steel industry, he said, not only has a big scale, but is also contributing a lot to green development.
As regards the international trade environment, the HBIS Group chairman said that protectionism poses challenges to the global economic order, while adding that against this it is important to uphold the principles of openness and win-win cooperation. He indicated that the steel industry needs to integrate at a deep level with technologies as a basis for the future. Progress has always been made when we are facing challenges, he said. Opening up has to be the major trend for the steel industry. Over the past 40 years, he continued, China has been upholding this principle and has transformed itself, while he also expressed the hope that the opening of the steel industry would continue as well.
As for his own company, Dr. Yu said that HBIS Group now operates in a total of 30 countries. He stated that the company would like to see wider-based cooperation and would like to export not only steel products but also technology and capital to other countries and thereby achieve a win-win scenario in other markets. He also said the focus needs to be moved from just manufacturing products to meeting the needs of customers.
Summing up, Dr. Yu emphasized that globalization is irreversible, especially in today’s environment. A fair and just trade system is invaluable, while protectionism is an obstacle to global development, he stressed. Concluding, the HBIS chairman said that steelmakers worldwide with their hands joined under the guidance of worldsteel can face the challenges ahead and achieve a new round of development in the world steel industry.