Seeking innovation and quality, preventing involution, and winning the decisive battle of the 14th Five-Year Plan

From July 29th to 31st, the 11th meeting of the 6th council (expanded) of the China Iron and Steel Industry Association will be held in Caofeidian, Tangshan, Hebei. How should we view the operating results of the steel industry in the first half of the year and predict the development trend in the second half of the year? How will the steel industry cope in the second half of the year and win the final battle of the "14th Five-Year Plan"? On the eve of the council meeting, a reporter from China Metallurgical News interviewed Zhao Minge, Party Secretary and Chairman of Shougang Group and President of the China Iron and Steel Industry Association, with these hot issues.

China Metallurgical News: How do you evaluate the achievements of the steel industry in the first half of the year?

Zhao Minge: In the first half of the year, steel companies adhered to the principle of "three determinations and three prohibitions", and strived to practice self-discipline in production control and market stabilization, maintaining relatively stable national production and operation. The biggest highlight in the first half of the year is that the total profit of steel companies has increased significantly year-on-year. According to preliminary statistics from the China Iron and Steel Industry Association, in the first half of the year, the operating revenue of member steel companies was 2998.5 billion yuan, down 5.79% year-on-year; operating costs were 2805.5 billion yuan, down 6.83% year-on-year; total profit was 59.2 billion yuan, up 63.26% year-on-year; sales profit margin was 1.97%, up 0.83 percentage points year-on-year; and the loss rate was 23.86%, down 18.19 percentage points year-on-year.

In the first half of the year, the operation of the steel industry was stable, and economic efficiency increased significantly. The main reasons are as follows:

First, the self-discipline and production control work in the steel industry has achieved remarkable results. According to the National Bureau of Statistics, in the first half of the year, China's crude steel production reached 514.83 million tons, down 3.0% year-on-year; Pig iron production reached 434.68 million tons, down 0.8% year-on-year. In June in particular, China's crude steel production decreased by 9.2% year-on-year, and pig iron production decreased by 4.1% year-on-year.

Second, the cost reduction was relatively large, Iron ore and coking coal cumulative decrease is greater than steel price decrease. The significant decrease in crude steel production led to a reduction in the demand for raw materials, and the prices of raw materials decreased significantly year-on-year. Taking iron ore as an example, according to customs data, in the first half of the year, China's cumulative imported iron ore was 592.205 million tons, with a cumulative import average price of US$97.5 per ton, down 17.7% year-on-year.

Third, the high export volume alleviated the domestic supply and demand contradiction. According to customs data, in the first half of the year, China's cumulative steel exports were 58.147 million tons, an increase of 9.2% year-on-year.

China Metallurgical News: How do you judge the development situation of the steel industry in the second half of the year?

Zhao Minge: From the supply side, this year the country will continue to implement the crude steel production control policy, and it is expected that relevant control measures will begin to show results in the second half of the year, and the steel supply and demand contradiction will be alleviated.

From the demand side, the performance of downstream industries varies. In the first half of the year, the national fixed asset investment (excluding farmers) was 24,865.4 billion yuan, an increase of 2.8% year-on-year, and the growth rate decreased by 0.4 percentage points compared with the whole year of 2024. By sector, infrastructure investment increased by 4.6% year-on-year, and manufacturing investment increased by 7.5% year-on-year; real estate development investment decreased by 11.2% year-on-year, and the decline further widened, showing that the real estate industry is still bottoming out. However, from the perspective of downstream manufacturing, some industries have increased and some have decreased, showing strong resilience. From the perspective of China's manufacturing PMI (Purchasing Managers' Index), the new export order index in June was 49.7%, up 0.2 percentage points month-on-month.

Overall, against the backdrop of the United States launching a global tariff war recently, the foreign trade situation is severe and complex, but the intensity of domestic policies to stimulate consumption may also further increase. We believe that with the implementation of a series of policies to stabilize the economy, the national economy is expected to continue to achieve stable and positive growth, and the economic structure will further stabilize and improve. It is expected that the steel industry will generally remain stable in the second half of the year, but the steel export situation may face more challenges in the second half of the year. The steel industry needs to make timely adjustments according to changes in downstream demand and strive to maintain a reasonable dynamic balance between supply and demand.

China Metallurgical News: What are the main problems and challenges facing the steel industry currently? In the face of the period of reduced production and adjustment, how do you think the steel industry should respond?

Zhao Minge: From the supply side, China's crude steel production has increased from 158,000 tons in 1949 to a peak of 1.065 billion tons in 2020, and then slightly decreased to 1.005 billion tons in 2024. From the demand side, the apparent consumption of crude steel has continued to decline after reaching a peak in 2020, falling to 892 million tons in 2024. The per capita apparent consumption of crude steel reached a peak of 737 kg in 2020 and has continued to decline, falling to 633 kg in 2024. It can be seen that China's steel industry is currently in a stage of reduced development after reaching its peak.

Of course, with the accelerated transformation of traditional manufacturing industries and the rapid development of emerging and future industries, as well as the country's increased support for "two new" and "two heavy" industries, the steel industry also contains structural development opportunities in the overall reduction situation. From the perspective of future downstream industry demand, the demand for steel in the real estate industry will decrease, the demand for steel in infrastructure construction is expected to remain stable, and there is still room for growth in the automotive, home appliance, shipbuilding, and energy sectors. At the same time, the market has both quantitative growth and qualitative improvement needs for key basic materials such as high-end manufacturing materials, green and low-carbon materials, and new energy materials, especially in large-scale engineering and key areas such as ocean development, aerospace, and nuclear power, which still have some development space due to their high technical barriers.

Based on the experience of developed countries such as the United States, Germany, and Japan, the reduction cycle from peak production to the first time that supply and demand are basically stable is generally around 10 years, with a production reduction of 18% to 30%. In the process of governance after reaching the peak, these developed countries have adopted diversified measures such as government subsidies, crude steel production restrictions, trade protection, mergers and acquisitions, and international layout according to their own development stage and industrial structure, and have all experienced a transition from "government-led, market-supplemented" to "market-led, government-supplemented".

Considering the downstream demand forecast and the experience of developed countries, it is estimated that by 2030, the apparent consumption of steel will decrease to 800 million to 850 million tons. Compared with 2024, the reduction scale will exceed 150 million tons, and it will enter a new stage where manufacturing steel is the main focus and construction steel is the auxiliary.

I believe that although China's steel industry is currently facing a more complex and changeable situation, the overall economic situation in China is improving, and I believe that with the guidance and support of relevant national policies, China may take a different path of steel industry development from developed countries in the future.

The next steps can be taken from the following aspects: First, strengthen technological innovation and technological progress, and plan a development path for high-end, intelligent, and green industries. Second, improve the capacity governance mechanism and build a new dynamic balance between supply and demand. Third, improve the multi-faceted policy support system and establish a long-term mechanism that combines incentives and constraints. Fourth, improve industry data governance and strengthen precise supervision of the steel industry. Fifth, expand opening up and promote the international development of the steel industry.

China Metallurgical News: "Anti-involution" has become a hot topic. The steel industry's "anti-involution" efforts are a long way off. The China Iron and Steel Association has been promoting the industry's prevention of "involutionary" competition. Could you introduce the achievements so far? How do you think the steel industry can further improve its "anti-involution" work and promote the healthy and high-quality development of the industry?

Zhao Minge: Focusing on the issue of "preventing and opposing involution" in the steel industry, the China Iron and Steel Association has been making unremitting efforts and actively cooperating with the state in carrying out comprehensive measures to rectify "involutionary" competition, focusing on strengthening corporate self-discipline and effectively avoiding vicious competition.

In the first half of the year, the China Iron and Steel Association mainly carried out the following work on "anti-involution": Following continuous calls from all sectors of society, including the steel industry, on March 25, the State Taxation Administration and four other departments issued an announcement and interpretation on optimizing services and standardizing the management of taxable goods exports. By optimizing export services and management, it can indirectly reduce the intensification of internal competition among enterprises due to unfamiliarity with policies or non-standard operations, thus avoiding "involution". Following the issuance of the Opinions on Improving the Price Governance Mechanism by the General Office of the CPC Central Committee and the General Office of the State Council on April 2, the China Iron and Steel Association responded actively and is preparing to establish an industry price supervisor system and industry benchmark costs to ensure that industry self-discipline work truly produces results. On June 10, the China Iron and Steel Association issued a proposal to "maintain the overall interests of the industrial chain and jointly resist "involutionary" competition," promoting the steel and automobile industries to strengthen industrial chain collaborative governance, build consensus, strengthen self-discipline, break "involution," and maintain market order. On June 26, the steel and shipbuilding industries jointly held the 5th Supply and Demand Symposium—the 2025 Shipbuilding Steel Supply and Demand Symposium—further consolidating the consensus of the two industries on collaborative cooperation and promoting the stable operation of the industrial chain. In short, from the introduction of relevant national policies to the active proposals of industry associations and the steady progress of specific work, all parties have been working together around the core goal of resisting "involutionary" competition, maintaining fair market order, and promoting the healthy and sustainable development of the industry, building a multi-dimensional and multi-layered response system.

I believe that in the coming period, the main contradiction facing the steel industry will still be the imbalance between total supply and total demand. In the context of the new policies on capacity governance not yet being systematized and clarified, the steel industry should unite, adopt multiple measures, and make precise efforts to strengthen self-discipline, "anti-involution," and promote the steady, orderly, and high-quality development of the industry.

First, deepen regional and product self-discipline. With the continuous decline in steel demand in the construction industry, the trend of localized sales of steel bars is becoming more obvious. At the same time, steel bars are still steel market important circulating materials, steel prices as a benchmark. Deepen the self-discipline of the steel bar market using a provincial model; focus on promoting self-discipline work for key products such as automotive steel, shipbuilding steel, and seamless steel pipes , maintaining the stable operation of the product market; continue to adhere to the "three certainties and three no's" principle, calling on enterprises to self-discipline in production control and price stabilization.

Second, give full play to the leading role of leading enterprises. Leading enterprises have a significant influence in regional and product markets. Give full play to the leading and stabilizing role of leading enterprises such as China Baowu, Ansteel, Shougang, Hegang, Shagang, and CITIC special steel to maintain the stability of regional and product markets.

Third, further strengthen exchanges and cooperation in the upstream and downstream industrial chain. Continue to consolidate the cooperation achievements with the shipbuilding industry, strengthen research on downstream industries such as automobiles, home appliances, and engineering machinery, build platforms for exchanges and cooperation between upstream and downstream industries, understand the problems existing in the connection between upstream and downstream industries, plan and carry out supply and demand docking activities, guide steel companies to strengthen and deepen cooperation with downstream enterprises, jointly cope with the risks of supply and demand connection and price fluctuations, and achieve win-win results for upstream and downstream industries.

China Metallurgical News: Shougang achieved "double over half" good results in the first half of the year. How do you evaluate this report card? What are the outstanding highlights?

Zhao Minge: In the first half of the year, facing a severe and complex market situation, Shougang actively practiced "one leading and two integrations," adhered to the "eight focuses" business policy, comprehensively promoted the in-depth reform and improvement of state-owned enterprises, and used a breakthrough attitude, reform measures, and innovative methods to overcome difficulties, using "upward progress" to offset "downward trends." Ultimately, it withstood the severe test of the market, and all budget and major operating indicators achieved their expected targets, delivering a "stable progress, progress towards improvement" report card.

Summarizing the outstanding highlights of Shougang's operation and production in the first half of the year, it mainly reflects in "five continuances":

First, continuous breakthroughs in technological innovation, significantly enhancing comparative competitive advantages. Shougang has always placed technological innovation in the most prioritized position in the company's development, continuously seeking development, efficiency, and potential through technological innovation. In the first half of the year, a number of technological research and development projects were successfully implemented at Shougang: Shougang's artificial intelligence large model platform was successfully launched and operated, and the "intelligent production scheduling decision-making system based on large models for fine-finishing processes" was independently developed, achieving 100% accuracy in multi-fine-finishing unit allocation, scheduling rule compliance, and system investment rate; for the first time, a continuous casting test with more than 55% scrap steel ratio in nine furnaces was achieved, creating the highest record in the country for the number of continuous casting furnaces with a high scrap steel ratio and the highest scrap steel proportion in the industry.

Second, continuous optimization of product structure and steady improvement of high-quality supply capacity. In the first half of the year, Shougang used technological innovation to build new advantages in high-end products. The three major strategic products, automotive steel, electrical steel, and plated tin chromium-plated steel, maintained good profitability. Among them, high-strength automotive galvanized outer plates DH500 and 2200 MPa hot-formed steel have the capacity for mass supply; successfully developed the highest strength grade MRT-5.5CA tin-plated product in a single cold rolling process, achieving supply to leading easy-open lid enterprises, etc. It is worth mentioning that Shougang is accelerating the development of medium and thick plates into its fourth major strategic product, achieving a breakthrough in the first half of the year; two Shougang oriented electrical steel products were launched globally for the first time, becoming the products with the lowest noise and the only ones capable of mass production among global soft magnetic materials of the same grade.

Third, continuous improvement of operational efficiency and release of new impetus in management effectiveness. In the first half of the year, Shougang continued to strengthen benchmarking and finding differences, achieving high-efficiency and stable production, and achieving new breakthroughs in extreme efficiency. The steel industry's material labor productivity reached 600 tons/person, with growth exceeding the industry average.

Fourthly, the park's development level has reached a new stage. In the first half of the year, Shougang Park launched a batch of benchmark projects, injecting strong impetus into the creation of the capital's humanistic living room and the Jingxi landscape vitality belt. For example, the main body of the Big Jump has been transformed into a comprehensive outdoor sports space for the public. This year marks the fifth consecutive year that we have undertaken the service guarantee task for the CIFTIS. From this year onwards, the CIFTIS has been changed from being held at two venues (the National Convention Center and Shougang Park) to one venue (Shougang Park). Currently, we are promoting the CIFTIS 5.0 project and the planning and design of the exhibition town to a high standard, building a high-level permanent venue, and creating a "never-ending" CIFTIS. In the first half of the year, Shougang Park received more than 6.65 million visitors, a year-on-year increase of 17%, driving park consumption of about 260 million yuan, a year-on-year increase of 8%.

Fifthly, deepening reforms continue to exert efforts, and the vitality of enterprises continues to increase. Reform is a gene that will forever flow in the blood of Shougang people, and it is also the key to solving Shougang's development problems. This year is the closing year of the deepening and upgrading action of state-owned enterprise reform. As a "double-hundred enterprise," Shougang has achieved a comprehensive completion rate of 47 reform tasks and measures in the first half of the year, laying a good foundation for a successful conclusion of the year.

China Metallurgical News: In recent years, what successful experiences has Shougang achieved in developing new-quality productivity?

Zhao Minge: We have established the practice path of adhering to "one leading and two integrations" as the practical path for Shougang to implement the requirements for the development of new-quality productivity, and it is also the path for Shougang to achieve strategic breakthroughs. The initial approach of Shougang to develop new-quality productivity is centered on "five adherences":

First, we adhere to taking technological innovation as the core driver of developing new-quality productivity to further enhance the comparative competitive advantage of the industry. Shougang has increased R&D investment, focusing on cutting-edge technologies such as artificial intelligence, big data, and the industrial Internet, to promote the transformation of steel manufacturing toward high-end, intelligent, and green development. Shougang Cold Rolling has been successfully selected as a global "lighthouse factory," becoming the seventh "lighthouse factory" in the global steel industry. Shougang's artificial intelligence large model has been officially launched, injecting new impetus into intelligent upgrading.

Second, we adhere to taking management innovation as an important support for developing new-quality productivity to further improve efficiency and effectiveness. Shougang, through management innovation, promotes organizational change and process reengineering to improve total factor productivity. For example, the main equipment efficiency of each process in the entire process of Qian'an Steel has reached a historical best record, with a product manufacturing cycle of 130 hours, a year-on-year reduction of 10 hours, and a decrease of 7.14%.

Third, we adhere to taking business model innovation as the key output of developing new-quality productivity to further enhance value creation capabilities. In the first half of the year, Shougang's EVI (supplier early involvement) supply volume in three places increased by 16% year-on-year, and the proportion of commodity materials reached 22.5%, a historical high. The fund company, financial company, and Shouhui Chanrong have done a lot of useful exploration in providing financial services around industrial output, and "Jingpiao E-xin" has been successfully launched in the park, promoting the "finance + project" service model and achieving synergistic industrial development.

Fourth, we adhere to taking the construction of the future digital space innovation pilot zone as a major task for developing new-quality productivity to further improve the sustainable development level of the park. Shougang Park is actively deploying emerging industries and future industries. For example, the Beijing Future Digital Space Innovation Pilot Zone was unveiled in Shougang Park. This is another landmark event for Shougang to implement the deployment of the construction of Beijing's international science and technology innovation center, promote the deep integration of scientific and technological innovation and industrial innovation, and create "one highland".

Fifth, we adhere to taking comprehensive deepening reform as a powerful driving force for developing new-quality productivity to further unleash development vitality. For example, in further improving the technological innovation system and mechanism and exploring the incentive mechanism for technological achievements transformation, we have formulated the "Scheme for Incentive of Original Technology Origination Projects and Medium and Thick Plate Technological Achievements Transformation," further mobilizing the enthusiasm, initiative, and creativity of scientific research personnel and production line personnel.

China Metallurgical News: In response to market changes and industry trends in the second half of the year, what specific measures will Shougang take in the second half of the year to ensure that it achieves its annual goals and wins the final battle of the "14th Five-Year Plan"?

Zhao Minge: In the second half of the year, we will unswervingly adhere to the annual budget targets and tasks, and make every effort to ensure the successful completion of the "14th Five-Year Plan" and the closing of various tasks of the deepening and upgrading action of state-owned enterprise reform, laying a solid foundation for a good start to the "15th Five-Year Plan".

In terms of specific measures, we will adhere to goal orientation, highlight key levers, and focus on doing the work of "five charges":

First, firmly grasp the primary task of high-quality development and repeatedly charge toward the annual budget task goals. Faced with the complex and severe market environment, we have determined "two invariables": the first is that the business tasks and budget indicators remain unchanged, and the second is that the "eight emphases" business policy remains unchanged. We use the certainty of internal work to offset the uncertainty of the external environment and strive to achieve the annual goals and tasks.

Second, firmly grasp the strategic path of "one leading and two integrations" and repeatedly charge toward the development requirements of new-quality productivity.

Third, firmly grasp the established business policy and repeatedly charge toward the continuous improvement of asset quality. We must pursue profitable income and cash flow profits, further strengthen operating cash flow management, and improve asset quality management to ensure the healthy and sustainable development of Shougang.

Fourth, firmly grasp the mission of "two parks and one river" and repeatedly charge toward the improvement of "two capabilities." We must firmly grasp the development opportunities of the linkage development of "two parks and one river," complete the service guarantee work of the CIFTIS "one meeting, one venue" to a high standard, plan the planning and construction of the exhibition town, and continuously improve the "two capabilities" (real estate operation capability and service capability for resident enterprises) to achieve the healthy and sustainable development of the park.

Fifth, firmly grasp the responsibilities and missions of state-owned enterprises and repeatedly charge toward the closing of the reform action plan. We must make good use of reform as an "important magic weapon," continuously improve the modern corporate governance system, promote the institutionalization and long-term effectiveness of the market-oriented operation mechanism, improve the multi-level risk control system, comprehensively and high-quality complete the tasks of the new round of deepening and upgrading action of state-owned enterprise reform, be a pioneer and leader in deepening reform, and lay a solid foundation for a good start to the "15th Five-Year Plan".

China Metallurgical News: This year, the steel industry has been officially included in the national carbon market. What impact will this have on the production, operation, and development strategy of the steel industry? What preparations has Shougang made in this regard? How will Shougang use the opportunity of being included in the national carbon market to promote the enterprise's low-carbon development?

Zhao Minge: In the short term, steel companies may face certain challenges. The advantages and disadvantages of emission performance will directly affect the cost of compliance. We need to quickly adapt to the national mechanism of using market-based transactions to control greenhouse gas emissions and firmly establish the concept of low-carbon development that "carbon emissions have costs, and carbon reduction has benefits." In the long term, we should take the inclusion of the steel industry in the national carbon market as an opportunity to seize the major opportunities of green transformation and low-carbon development, formulate a green and low-carbon strategic plan, vigorously promote low-carbon technological innovation, continuously improve carbon asset management capabilities, continuously improve the low-carbon competitiveness of products, better adapt to the requirements of domestic and international green and low-carbon development, and create a comparative competitive advantage for enterprises.

Faced with new situations, new tasks, and new requirements, Shougang will adhere to the concept of a systematic approach, strengthen top-level design, adhere to innovation-driven development, and strengthen strategic layout.

First, strengthen policy research. In response to the newly revised national technical specifications such as the "Guidelines for Accounting and Reporting of Greenhouse Gas Emissions from Enterprises in the Steel Industry" and the "Technical Guidelines for Verification of Greenhouse Gas Emissions from Enterprises in the Steel Industry" this year, we will conduct multi-level exchanges and training to systematically master the carbon emission accounting methodology.

Second, we will consolidate basic management. Focusing on carbon data quality management, starting with system construction, we will improve and perfect the management system and enhance the basic capabilities of various units in carbon emission measurement, detection, statistics, and accounting. At the same time, we will further promote the empowerment of digital intelligence in carbon control, establish a steel intelligent carbon management platform, build a carbon accounting model, optimize data collection, and gradually realize the functions of tracking, accounting, analysis, and optimization of organizational carbon and product carbon.

Third, we will deepen the research and development of extreme energy efficiency. This is the current work focus. Shougang will continue to strengthen the core position of technological innovation in the green and low-carbon development of enterprises, vigorously promote the application of advanced and applicable energy-saving and carbon-reducing technologies, strengthen benchmarking with advanced enterprises, and do a better job in energy saving and carbon reduction with higher standards and higher quality.

Fourth, we will systematically study carbon asset management strategies. Focusing on the optimization and maximization of carbon asset allocation, we have formulated and issued the "Work Plan for Actively Responding to the Inclusion of the Steel Industry in the National Carbon Market and Strengthening Carbon Asset Management," clarifying the enterprise's short-term, medium-term, and long-term carbon asset management goals and related strategies.

Next, we will thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the second and third plenary sessions of the 20th Central Committee, implement the national "dual carbon" strategic deployment and the concept of green development, coordinate the synergistic relationship between green, low-carbon, and ecological sustainability, the security of industrial chains and supply chains, and industrial competitiveness, formulate and improve Shougang Group's 15th Five-Year Plan for green and low-carbon development, explore and implement a path of carbon reduction with Shougang's characteristics, comprehensively enhance green and low-carbon competitiveness, empower new productive forces for development, and contribute Shougang's strength to the national response to climate change and improvement of ecological environmental quality.