“Everyone is holding on, waiting for policies to be introduced, waiting for market changes.” The head of a steel company in Tangshan with a capacity of nearly 5 million tons claims to have already reduced capacity by nearly 20% to cope with the current market situation. A deputy general manager of the company even believes that compared with last year, profits this year may decrease by 40%.

　　The entire steel industry continues to be sluggish. After a brief improvement in February this year, the subsequent "Golden March and Silver April" performed mediocrely, without significant improvement. And after entering June, the industry exclaimed that it had approached the trough that appeared in September last year.

　　In addition to market pressure, another kind of pressure is also emerging: the long-lasting expectation of capacity reduction policies seems about to be fulfilled, and what remains uncertain is only how it will begin. Previously, a local environmental protection storm involving 199 enterprises was interpreted by companies as a policy tool—especially since the earlier "integration" approach had not been effective, this might be a completely new approach.

　　Policy Concerns

　　"When policies encourage, we are not included; when policies crack down, we are the first to bear the brunt." Small and medium-sized enterprises complain that they have no say.

　　On the morning of July 4, a meeting titled "Tangshan Metallurgical Industry Transformation and Upgrading, Environmental Protection Symposium" was chaired by the city's main leaders. The 69 enterprises attending were mostly steel companies, and the local steel industry association and four banks also participated.

　　"Initially it was called the Transformation and Upgrading Symposium, and later the four words 'Environmental Protection' were added." A civil servant involved in formulating the meeting agenda revealed, "The leaders want to tighten the environmental protection headband on enterprises again."

　　The heads of the enterprises attending the symposium were naturally somewhat reluctant. "Just for desulfurization alone, not to mention small enterprises failing to meet standards, even large enterprises find it very difficult to meet standards." A deputy general manager of a participating enterprise said. What also disgusted him was the agenda item "establishing a unified trading platform for bulk commodities such as ore, coking coal, and steel"—he worried that this would become a tool for government fees but would not bring real changes to the industry.

　　In addition, among the nine agenda items that day, there were also joint procurement and extending the industrial chain. One of the more open agenda items was asking enterprises, "To promote the transformation and upgrading of the metallurgical industry and accelerate development, what policy measures should local governments introduce in terms of taxation and industrial development?" This became a hot topic of discussion among enterprises, but officials did not make a clear statement.

　　"Some enterprises proposed that the current market situation is not good and hoped to appropriately extend the deadline for certain environmental protection measures. Some enterprises also mentioned that Chongqing Steel received 500 million yuan in subsidies, meaning they hope the government can step in to rescue the market."

　　"Enterprise awards, photos of leaders' inspections, all put into the materials. I don't know if it will help." On July 4, at the Tangshan Municipal Bureau of Industry and Information Technology, a local steel company was submitting a thick "Application Report for Steel Industry Standard Conditions" to the bureau.

　　In 2010, the General Office of the State Council issued the "Several Opinions on Further Increasing Energy Conservation and Emission Reduction Efforts and Accelerating the Structural Adjustment of the Steel Industry" (Guobanfa [2010] No. 34), requiring the Ministry of Industry and Information Technology to take the lead in formulating the "Standard Conditions for Production and Operation of the Steel Industry" (hereinafter referred to as the "Standard Conditions"). In June 2010, the Ministry of Industry and Information Technology formulated the "Standard Conditions," and revised it again in September 2012, effective from October 1, 2012.

　　On April 2, 2013, the Ministry of Industry and Information Technology announced the first batch of 45 enterprises that comply with the "Standard Conditions." These 45 steel enterprises produced a total of 300 million tons in 2012, accounting for 41.4% of the national crude steel output that year, including state-owned enterprises such as Baosteel, Ansteel, and WISCO, as well as private enterprises such as Shagang and Fangda Special Steel. However, no Tangshan steel enterprises appeared among them.

　　When the Ministry of Industry and Information Technology released the first batch of enterprises complying with the standard conditions, it also stated: "For enterprises that do not meet the standard conditions, the Ministry of Industry and Information Technology will, together with relevant departments, comprehensively use economic means such as differentiated electricity prices, fiscal rewards, and assessment and accountability, legal means, and necessary administrative means to gradually compress their living space, force them to withdraw from the market, and resolve excess capacity."

　　A report submitted by the Tangshan Bureau of Industry and Information Technology to the Provincial Department of Industry and Information Technology on July 4 stated that there are a total of 22 enterprises in Tangshan that meet the application conditions.

　　The head of a steel company with a capacity of nearly 5 million tons, after seeing the April production statistics of the local steel association, believed that the data contained therein was inaccurate, because except for Tangshan Steel's production reduction, most enterprises were actually increasing production, which he considered inconsistent with the facts. "This data is incorrect. Our production has decreased, how could it increase? Could the steel association's statistics create an illusion for the government, making the government think our situation is better than Tangshan Steel's, and then when formulating policies, impose capacity compression on us?" He said he might be overly sensitive, but he believed that everyone has been quite sensitive about these things recently.