A Study On The Overcapacity Of Valin Steel Based On Supply-Side Reform

In modern and contemporary history,the degree of development of a country’s steel industry was once considered an important indicator of the overall national strength.In recent years,our country has defined the steel industry as "two high and one surplus"(high energy consumption,high pollution,and severe overcapacity)industries.Supply-side reforms have also focused on capacity reduction.This thesis first selects 26 large listed companies in the steel industry and analyzes the capacity utilization rate of 26 companies using the DEA window analysis method.The results show that during the period from 2011 to 2016,the Hunan Valin Iron and Steel Group(hereinafter referred to as "Valin Steel")had a technical efficiency value(TE)and a purely technical efficiency value(PTE)of less than 0.1;the capacity utilization rate was always at the end of the industry.The empirical results show that Valin Steel’s relative efficiency in the industry is extremely low,and there is a serious overcapacity in Valin Steel.After finding that there is a serious overcapacity in Valin Steel,this thesis combines domestic and foreign scholars’ theoretical research on supply-side reform and overcapacity,and analyzes the causes of excess capacity of Valin Steel from 2014 to early 2017 from macroeconomics,policies,regional economy,industry,and operating conditions.The analysis concludes that under the background of sluggish global economic growth and slowing down of China’s economic growth,due to factors such as high prices of raw materials such as iron ore,insufficient technical level of products,high leverage,and high operating costs,it has caused a serious overcapacity in Valin Steel.This caused Valin Steel to make a total loss of more than 4 billion yuan between 2014 and 2016.Finally,combining the "three go ones and one supplement" concept and the five development concepts of "innovation,coordination,greenness,openness,and sharing ",this paper starts from the three aspects of capacity reduction,deleveraging and cost reduction,takes innovation as the entry point,and proposes policy recommendations for Valin Steel based on supply-side reforms and domestic and international overcapacity research theories.The policy suggestion is that Valin Steel should eliminate excess production capacity through joint national policies,learn from successful restructuring and reform experience,implement diversified industrial layout,implement steel product upgrade strategy,strengthen internal management and reduce corporate costs,and actively support the "One Belt and One Road" to promote international capacity cooperation,reduce corporate debt and other ways to remove excess capacity and improve business conditions.