The economic society is a dynamic circulating system, even if a small place is blocked or a knot is formed, the whole system will be affected. This image is reflected in the poor connection between steel production and demand under the covid-19 epidemic.

Because of the epidemic, the terminal demand of factories, construction sites and other temporary reduction, steel enterprises encounter difficulties. The latest data released by the China federation of logistics and purchasing's steel logistics committee showed that the purchasing managers' index (PMI) of the domestic steel industry was 36.6% in February, down 10.5 percentage points from the previous month and hitting a new low in recent years.

Jinan iron and steel enterprises have encountered the same difficulties. Jinan municipal bureau of industry and information technology recently held an urgent meeting on production and demand to link up and promote cooperation, get through the local industrial chain and promote cooperation between enterprises. The producers and suppliers who have been facing each other across the distributors for many years are now reaching out to each other because of covid-19.

Temporary reduction in demand and rapid rise in inventories

People in many industries are familiar with PMI. It is an index that reflects the trend of economic changes, with 50% as the dividing line. If it is greater than 50%, it indicates that the economy is on the rise, and vice versa. Today's steel industry PMI is only 36.6%, really not high. In terms of sub-indexes, the production index of the steel industry in February was 31.3%, down 15.4 percentage points from the previous month, the purchasing volume index was 28.1%, and the raw material inventory index was 29.2%, both of which were significantly lower than the previous month.

The steel market suffered a downturn, the national key statistics enterprises steel inventories, social steel inventories are more than 20 million tons. In jinan city, organized by the bureau of industry and information technology of the iron and steel products supply and demand meeting, gathered jinan several important iron and steel enterprises and steel enterprises.

The first to speak is the laiwu branch of shandong steel co., LTD., also known as laigang in jinan. Last year, the company bucked the overall decline of China's steel industry and faced temporary difficulties in its busy production workshops.

"2.03 million tons of steel, 1.97 million tons of iron and 1.96 million tons of steel, up 5.8 percent, 3.7 percent and 6.5 percent year on year, respectively..." This is the production data of laiwu branch of shandong steel co., LTD in the first two months of this year. "Affected by the epidemic, the price of steel has dropped a lot," he said. "although the production has increased significantly, the profits have fallen sharply."

Taishan iron and steel group is a private iron and steel enterprise with 50 years of production and operation history in jinan. It is the largest 400 series stainless steel production base in China, the only full-process stainless steel production enterprise in shandong province, and the largest cold-rolled sheet production base in shandong province. The official of taigang said that due to the epidemic, the logistics was blocked, and the products could not be transported normally. The inventory has been accumulating rapidly, once reaching the highest level in history, but it has been reduced recently and remains at a high level.

Shandong fulun iron and steel co., ltd. is a key enterprise in laiwu district with steel as its main product. According to the statistics of laiwu district, the downstream customers of jiuyang group and taishan iron and steel group in the area under their control are not able to resume their work and reach their production rate, which leads to the prominent contradiction between supply and demand, the serious overstocking of steel products, the high financial cost and the increasing pressure on enterprises' capital.

Low local sales rate encourages industrial chain collaboration

"About support was introduced in December last year, jinan laiwu area, gangcheng speed up the development of a number of policies and measures, and put forward to support and accelerate the transformation and upgrading of the iron and steel industry, and build and coastal steel cluster complementary advantages, the difference of development level billions of fine steel industry cluster, the extension of the iron and steel industry chain, promoting 400 hot-rolled and cold-rolled stainless steel downstream manufacturing services, auto parts, bearing, grinding, forging industry development.

Now, steel enterprises encounter temporary difficulties, what is the way to crack? Shandong steel co., LTD. Laiwu branch of the relevant person in charge of the proposal, can help to improve the ji 'nan area steel terminal consumption proportion? A comparative data shows that in 2019, a steel enterprise in jinan sold 11.12 million tons of steel domestically, of which 2.06 million tons were consumed in jinan, only accounting for 18.53% of the total domestic sales.

Industry insiders said that, take the construction industry as an example, the annual output value of shandong construction industry is more than one trillion yuan, the localization rate of high construction materials only cement and other products only a few products, the localization rate of other products is less than 10%; It is recognized in the industry that 30% localization rate is normal. Obviously, the localization rate of the steel industry still has room to improve.

In industrial production, for example, pingyin area with pressure vessel industry cluster, a tower crane industry cluster chapter grave area, jiyang area have elevator industry cluster, and sinotruk, annual output value over one hundred billion yuan, to form a complete set of special automobile industry cluster, etc., used by volume is very big, if the localization rate increased, help digestion, jinan iron and steel enterprises at present, inventory should be no problem.

Relying on leading enterprises, accelerate the enrichment of product system, improve the coordination and supporting system, extend and lengthen the industrial chain, improve the supporting capacity of localization, and realize the development of parks and clusters... This is what jinan has been trying to promote for a long time. In particular, on January 19 this year, jinan city revised and issued the "implementation opinions on promoting the consumption of industrial products" (hereinafter referred to as "opinions"), which further strengthened this orientation.

Article 1 of the opinions clearly states that we should promote the accurate and effective connection between supply and demand, promote the coordination and matching of industrial chain, encourage leading enterprises in various industries in the city to form an "industrial alliance" with upstream and downstream enterprises of industrial chain, and build an industrial chain supply and demand communication platform featuring joint tackling of key problems, information exchange, resource sharing and complementary advantages. Regularly organize matchmaking meetings, business negotiations and other activities to promote cooperation and support among the alliance and the upstream and downstream enterprises of the industrial chain within the alliance; Leading industrial cluster enterprises that promote and improve the city's industrial chain coordination and supporting level shall be rewarded according to relevant regulations on the basis of comprehensive consideration of their supporting and driving ability and cluster innovation and transformation ability.

Reduce intermediate links and expand the proportion of "made in jinan" procurement

After the outbreak of the epidemic, jinan municipal committee of economic operation emergency support headquarters issued the "notice on strengthening production and marketing coordination to promote the steady and healthy development of the economy". According to the spirit of the document, jinan iron and steel products supply and demand meeting was held. At the meeting, construction enterprises have said that the demand for steel is relatively large, also very recognized jinan iron and steel enterprises products.

China power construction said it is mainly responsible for the construction of large projects, real estate development and construction, using more than 50,000 tons of steel each year, as the project resumes work, will sort out the demand. The person in charge of jinan sijian said that the project is being started in an orderly way and the products of laiwu branch of shandong steel group are highly recognized. When the demand comes up, the purchase quantity will be increased.

The person in charge of shandong construction engineering group said that last year, more than 100,000 tons of rebar steel were used. There was inventory before the end of last year, which can meet the recent demand. The next step will be to make statistics on the demand and actively contact with the steel enterprise dealers. The person in charge of jinan urban construction group said that the enterprise used 140,000 tons of rebar steel last year. Generally, the company contacted with dealers. In the next step, it will cut down the intermediate links and purchase directly from the steel enterprise to reduce the cost. In addition, steel enterprises for local steel enterprises to introduce some preferential price policies, warehousing, etc.

The reporter noted that the appeal of jinan urban construction group is more representative, steel enterprises also responded. The person in charge of taishan iron and steel group said, from the perspective of steel enterprises, direct procurement from steel enterprises, can reduce the intermediate links, reduce the price; From the point of view of steel enterprises, we can directly understand the needs of end customers, so as to produce marketable products, which is a win-win choice.

The relevant person in charge of shandong steel stake in laiwu branch, said after the outbreak, they intend to break through the past rely mainly on dealer sales of steel, to establish a direct sales department, more develop terminal consumer customers, especially in key projects and key enterprises in the province, expand direct proportion, provide to storage, transportation and other services, achieve win-win cooperation with end users.

Jinan, said an official with the bureau of industry and related disease the most intense, once stuck traffic, logistics, combined with the resume work reaches producing the steel enterprise, key projects, due to steel mills product backlog, that highlights the necessity of expanding local industry collaboration, "in the event of an emergency, a small scale traffic affected relatively small".

At the same time, under normal circumstances to increase local cooperation, there are many benefits, at least easy communication and coordination, short transport distance, low logistics costs, easy to solve problems. In the next step, jinan municipal bureau of industry and information technology and other relevant departments will combine the resumption of work and production with the expansion of domestic demand, release the consumption that has been suppressed and frozen, and foster and strengthen the new and upgraded consumption that has been generated in the prevention and control of the epidemic. Actively expand the purchase ratio of "jinan made" industrial products, and further improve the market share of competitive industrial products in jinan.