Coking Industry Upgrade Calls "Wolf Group Effect"

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China Drying Network News At present, the downstream steel, chemical and other industries have sluggish demand, and the domestic coking industry is in the midst of serious overcapacity. However, the industry generally believes that this is an unprecedented severe market crisis and a rare opportunity for transformation and upgrading. The government should actively encourage comprehensive co-financing policies such as finance and land to encourage the independent coking enterprises to achieve a close joint reorganization with coal, steel, and chemical companies, integrate existing coking advanced production capacity, and maximize the optimal allocation of production factors and resources. "Good companies" live better, so that "good companies" find a way out.

- Overcapacity leads to industry battles

The coking industry is an important basic industry supporting the development of China's industrial economy. By the end of 2011, the national coking industry had a capacity of 428 million tons, of which Shanxi, Hebei and Shandong provinces had production capacity of 160 million tons, 88 million tons and 62 million tons respectively. According to Wang Qingtao, chairman of the Shandong Coking Industry Association, in recent years, despite the domestic elimination of large amounts of coke production capacity, the overcapacity in the entire industry is still very prominent. Take Shandong Province as an example. At present, the province's coke capacity is over 55%, and some companies are in semi-load production state. Among them, five or six coking companies have been out of production due to poor quality, high energy consumption, and lack of financial support.

The reporter recently saw in the industrial park of Mingji Town, Zouping County, Shandong Province that there are many small coking enterprises such as Jinguang and Fuming. Through the wall, large amounts of coke piled up can be seen and the busy business scenes of the past cannot be seen. Zou Ping Fuming Coking Plant Manager Yan Xiaojun told reporters that in July and August last year, due to coal prices do not come, and coke prices continue to decline, coupled with relatively small companies, coal does not give long-term preferential prices, high bank financing costs, they The production of a ton of coke costs 150 yuan, and the minimum equipment load is reduced to half.

Jiang Dongcheng, general manager of Shandong Tiexiong Metallurgical Technology Co., Ltd., said that overcapacity has caused the coke price war to be in a heated state. Some time ago, coking plants generally faced a situation of high inventory pressure. Small enterprises with insufficient funds could only choose to limit production and maintain. All of them united and priced together at least to resist pressure from steel mills and give them a fair price. But in reality there are still companies that secretly cut prices. For example, as the leading company in the industry, Tiexiong has just set a coke price of 1,450 yuan/ton, and immediately the company will set 1,430 yuan/ton, or even snatch the market at a lower price.

What worries Wang Qingtao more is that once the economic situation improves, some backward production capacity will resume. It is undeniable that a large number of backward coking capacity should have died in the last round of financial crisis, but it has been driven by the market to today. Taking Zouping Fuming Coking Plant, which has an initial production capacity of only 300,000 tons, as an example, the original shareholders of the company have avoided the elimination of 600,000 tons of production capacity in 2010 to cross the threshold of industry entry. Yan Xiaojun frankly stated that, from an overall point of view, this caused a round of capacity expansion. At that time, the shareholders apparently played the ball. The backward production capacity that has not been eliminated before, once the market situation is good, can resume production again.

--Industry Upgrade Calls "Wolf Group Effect"

Facing the industry disorder with overcapacity, Zhang Jianguo, deputy governor of Shandong Province, stated at the inaugural meeting of the province's Industrial and Economic Operation Command that government regulation is indeed in a "difficult position." In the current situation where some companies do not eat food, if the company is rescued first, the industrial structure is difficult to adjust. Businesses seem to be alive, but their internal strength does not work. Once the situation deteriorates, it will no longer work. Therefore, economic stimulus policies cannot be temporary, and they must be clearly oriented in the direction of structural adjustment, and support independent innovation and the creation of famous brands. To meet the direction of the adjustment of the state's industrial policy, the government must give strong support, not just to save the company.

In response, Wang Qingtao said with deep feelings that although enterprises with excess production capacity do not lag behind, a large number of enterprises cannot adapt to the new development environment and cannot participate in cluster competition. In the future, the industry competition will shift from the competition of individual enterprises to the competition of industry clusters. In the end, enterprises that cannot adapt to the development or cannot participate in the development of the cluster will be eliminated and the whole will become a scientific layout. This is a "wolf pack effect." Ensuring the team can be stronger, leaving the team only a dead end.

Several backward production enterprises are likely to destroy the entire industry and bring the entire industry into a state of disorderly competition. The development of industrial enterprises must be healthy and orderly. Otherwise, good enterprises will not live well. At present, there are at least 15 coking companies in Shandong Province that are in semi-load production, mainly in the western region, mainly because of their poor location and in a loss-making state of operation. For such backward production enterprises, it is necessary to consider how to make them “deadly”. If the company dies painfully, it will also cause harm to the society and the bank's money may or may not come back.

“Let us take this opportunity to eliminate outdated production capacity with high energy consumption. At present, some companies are reluctant to be reorganized and are suffering. This may delay the timing of reorganization. At least one-third of the loss-making enterprises should be eliminated, otherwise the production capacity will not be reduced, and these enterprises are mostly cut off from the last financial crisis and not cut down, mainly due to local protection, and the elimination of production capacity fails to timely Wang Qingtao believes that reorganization is not a monopoly, but to better guide the industry from more disorderly competition to orderly distribution of science. Through upstream and downstream mergers and reorganizations, the cohesion and steel industry will become more and more tight, the industry chain will be long, and the process will be short, which will be conducive to technological innovation and efficiency improvement. It is time to reorganize the industry.

--Strengthen policy guidance to promote transformation and upgrading

Recently, Shandong Province proposed the optimization and reorganization of 41 coking companies listed in the national bulletin catalogue. It strives to control the reorganization of coking enterprises within 20 households and control the coke production capacity within 40 million tons by 2016, basically achieving the transformation and upgrading of coking enterprises in the province. However, people in the industry believe that in addition to the active efforts in the industry, they also need strong support from government policies and banks.

First, it emphasizes the scientific layout of resource allocation and encourages the transformation and upgrading of the coking industry. Since last year, Shanxi and Shandong have successively issued guidelines for the transformation and upgrading of the coking industry in the province, and actively promoted industrial restructuring to achieve regional cluster development. Wang Qingtao said that enterprises can not solve the problem of development by reducing staff salaries, relying on potential exploitation can only be a temporary solution, and fundamentally rely on transformation and innovation. At present, Shandong Coking Group is planning to launch several transformation and upgrading projects, including the use of alumina red mud for building materials, coal gasification and other projects.

The reporter recently saw at the production site of Shandong Tiexiong Metallurgy Technology Co., Ltd. that the coking unit here is in full-load production, and the coke produced is loaded and shipped at any time without inventory. Even so, the general manager of the company, Jiang Dongcheng, told the reporter that considering that the coke industry has already had a serious overcapacity, the company is planning to phase out these production capacities and launch coal-fired industrial gas projects to meet the needs of peripheral companies for gas. However, although the development of gas energy is in line with national policies, the shift from a coking enterprise to a coal chemical enterprise has been constrained by the national policy of restricting coal chemical industry. He believes that this requires “special discussion” on specific projects, and cannot put some policies in the coal chemical category, leaving the company with no room for transformation.

The second is to increase financial support for industry mergers and reorganizations. Wang Qingtao said that in the current economic downturn, affected by currency control factors, coupled with commercial banks to strengthen the review and management of credit, coking industry financing has become increasingly prominent, the actual corporate loan interest is much higher than the normal loan interest. At present, bank lending is not only up to 8% per annum, and some small and medium-sized enterprises have even reached 13%-15%. Many banks are still eager to recoup their loans, which exposes companies to greater operational risks. In particular, the difficulty of corporate financing has caused the industry to become a bottleneck in the process of transformation and upgrading. Some good projects are difficult to implement as soon as possible.

The third is to strictly enforce new project approvals and resolutely eliminate backward production capacity. When the current situation is not good, effective measures should be taken to increase production capacity elimination. Yan Xiaojun believes that for those companies that do not have a good business and do not have strength, they should fall. In order to strengthen self-discipline in the industry, similar anti-dumping measures should be formed in the industry. If any company sells at a lower cost, it can be seen as disrupting the market order. Wang Qingtao proposed to use government policy funding subsidies, plus bank funding support, to support the establishment of industry mutual aid funds and other forms to ensure the elimination and restructuring of enterprises. At the same time, the new project is strictly controlled and it is recommended to solicit the opinions of the association.

Wang Qingtao said, “Orderly competition can make the industry develop healthily, and disorderly competition is a disaster for the industry. In the past, there was a rapid flow of water to a turbulent flow, and it is now necessary to cut off levels and control flows. For some places New projects with overcapacity will have to be determined by higher-level governments."

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