Digital transformation of Chinese iron and steel enterprises: Problems and countermeasures

I. Research background

In recent years, driven by the new round of scientific and technological revolution and the accelerated development of industrial transformation, the digital economy, including digital industry and industrial digitalization, has achieved rapid development, and has become an important way to promote China's economy from high-speed development to high-quality development. In the modern economic system, the digital economy has become the source of new economy, new driving force and new model development. During the "14th Five-Year Plan" period and for a long time to come, the digital economy will become an important engine for China to implement supply-side structural reform under the new normal and promote the development strategy of replacing old and new growth drivers.

Manufacturing is the main body of the real economy and the foundation of the country, as an important basic raw material industry, steel industry is an important part of China's manufacturing industry. From the perspective of input and output, the main inputs of the steel industry are iron ore and scrap steel, the auxiliary inputs are coke, limestone, energy and electricity, and the output products are various types of steel products. From the perspective of the technological characteristics of the industry, the iron and steel industry is a typical process industry, and the upstream and downstream ore raw material mining and processing → iron making → steel making → steel rolling → steel deep processing → steel application is closely related to the technical process, and the interdependence is strong, and the production process is irreversible. From the perspective of the economic characteristics of the industry, the investment scale of fixed assets such as steel industry equipment is large, the precipitation cost is high, and it is a capital-intensive heavy industry. Reaching a certain initial scale has an important impact on the economic benefits of the steel industry. In recent years, due to the impact of multiple factors such as rising manufacturing costs, serious overcapacity and pressure on energy conservation and carbon reduction, the existing development model and profit model of China's iron and steel industry enterprises have been severely challenged. Data show that in the first three quarters of 2022, China's steel production and steel exports both fell by 3.4% year-on-year, the number of loss-making enterprises and the amount of losses in the national key large and medium-sized steel enterprises increased by 7.8 times and 53.8 times year-on-year, respectively, and the total profit of the national key large and medium-sized steel enterprises fell by 71.3% year-on-year. Faced with such a grim situation, Chinese steel enterprises can only accelerate the deep integration of digital technology and the real economy, accelerate the process of digital transformation of enterprises, in order to greatly improve the production efficiency and energy efficiency of the steel industry, reduce production costs and carbon emissions, and accelerate the quality change, efficiency change and power change of the steel industry.

Second, the current situation of digital transformation of the steel industry

In order to adapt to the new round of scientific and technological revolution and industrial change brought about by the digital, networking, intelligent development trend of manufacturing industry, in recent years, China's iron and steel industry has increased the information, digital, networking, intelligent capital, technology, talent investment, 2021 more than 10 billion yuan of special investment for the digital transformation and upgrading of iron and steel enterprises. The progress of digital transformation of steel enterprises has been accelerated, and remarkable results have been achieved.

(1) The level of industry digitalization has been significantly improved

In recent years, Chinese iron and steel enterprises have continued to organize digital transformation activities to promote the "integration of the two" as a starting point, and the automation, informatization, digitalization, networking and intelligence level of iron and steel enterprises has been continuously improved. In 2018, the integration index of China's iron and steel industry was 51.2, the numerical control rate of key processes was 68.7%, and the proportion of enterprises applying e-commerce was more than 50%. In 2020, the integration index of the two aspects of China's steel industry will reach 54.3, the numerical control rate of key processes will reach 64.6%, and the digitalization rate of production equipment will reach 46.9%. In 2021, the integration index of China's iron and steel industry rose to 59.9, the numerical control rate of key processes reached 70.1%, and the digitalization rate of production equipment reached 51.3%. Compared with 2015, the integration index of China's steel industry in 2021 has increased by 19.4, and the level of industry digitalization has been significantly improved, which has initially reversed the industry image of the iron and steel industry in the past.

(2) Digital application scenarios are increasing

At present, under the dual efforts of the government and enterprises, China's iron and steel industry has formed six application models of platform design, intelligent manufacturing, personalized customization, service extension, digital management and network collaboration, covering dozens of typical application scenarios, and digital application scenarios such as smart mine, intelligent workshop, intelligent warehousing, intelligent online testing, and intelligent logistics are increasing. The application effect is good. For example, after Baowu Group launched the smart center project in Shaosteel, Shaosteel established an integrated intelligent control platform through blast furnaces, sintering, coking, materials, and energy media, and realized cross-process, cross-regional, long-distance, large-scale centralized control over a distance of more than 5 kilometers, so that 42 central control rooms were streamlined and merged into one centralized control center, and the operation area was reduced from 50 to 18. Greatly improve the production and management efficiency of Shaosteel. In the 2021 smart manufacturing excellent scene list of the Ministry of Industry and Information Technology, 14 projects such as the "predictive maintenance and operation optimization" project and "intelligent warehousing" project of Angang Group, the "Intelligent online detection" project of Shougang Group, the "Dynamic process/parameter optimization" project of Baowu Group, and the "Intelligent online detection" project of Valin Iron and Steel Group were among them.

(3) Leading backbone iron and steel enterprises have achieved remarkable results in digital transformation

In recent years, China's leading backbone steel enterprises have actively embraced digitalization, networking, and intelligence, and the development of digital transformation has achieved obvious results, and digital transformation is at the forefront of the industry. Due to the effectiveness of digital transformation, at the beginning of 2022, leading steel enterprises such as Baobu Group, Delong Iron and Steel, Nanjing Iron and Steel, and Zhongtian Iron and Steel were shortlisted for the Ministry of Industry and Information Technology's 2021 Industrial Internet pilot demonstration project list. At present, more than 80% of the domestic steel enterprises have been promoting intelligent manufacturing, steel leading backbone enterprises have basically completed the production line level basic automation, process control system, production execution system, manufacturing management system top-down vertical integration of the four-level system. Taking Baowu Group as an example, Baowu Group has continued to promote the "four unambiguates" in recent years, accelerating the application of industrial robots, unmanned driving, artificial intelligence, big data, cloud computing, blockchain, 5G, simulation, AR and other new technologies. 

The number of unmanned reservoir areas, digital workshops, black light factories and intelligent enterprises in Baowu Group has increased, especially in Shanghai Baoshan Base. It has not only successfully been selected as the "Lighthouse Factory" of the World Economic Forum (WEF), but also has taken the lead in realizing "one-click steelmaking" in the world. For example, Shagang Group innovatively implemented the intelligent project of "Application of new mode of intelligent Manufacturing of high-end wire whole process" and invested 400 million yuan to transform and upgrade the converter special steel, billet repair mold and rod line workshop. After the completion and implementation of the project, the production efficiency was increased by 31.5%, the operating cost was reduced by 23.2%, and the energy consumption per unit of output value was reduced by 19.7%. With the continuous advancement of digital transformation, the main process processes of mining, ironmaking, steelmaking, and rolling in China's leading backbone iron and steel enterprises have realized the intelligent control of grinding classification operations, the intelligent closed-loop control of sintering machine, the platformization of blast furnace operation, the full process automation of converter steelmaking and the intelligent refining control system, and the digital transformation has achieved obvious results.

Third, the problems in the digital transformation of the steel industry

Although the digital transformation of iron and steel enterprises has achieved obvious results in recent years, due to the multiple layers of the iron and steel industry chain, complex production processes, and increased difficulty in material control, the integration of data and reality in the steel industry still faces no small problems and challenges, especially the weak foundation of intelligent manufacturing, the lagging construction of industry standards and application scenarios, and the lack of key core technologies. Has seriously restricted the smooth advancement of the digital transformation of iron and steel enterprises.

(1) The construction of industry standards and application scenarios for digital transformation and upgrading lags behind

There is no universal standard and scenario for the digital development of China's steel industry, which affects the in-depth promotion of the digital transformation of the steel industry. Although the iron and steel industry is huge, various enterprises are also doing a variety of digital transformation efforts, but the previous information transformation is based on different data standards, which is easy to produce information islands, restricting the mining of data value. At the same time, the entire steel industry has not been relatively successful and universal digital scenarios, making the practice of digital transformation between steel enterprises is very different, and the uncertainty is also very large, restricting the improvement of the overall level of digital transformation of the steel industry.

(2) The foundation of intelligent manufacturing needs to be consolidated, and the breadth and depth need to be expanded

At present, the intelligent control system model of smelting in China's iron and steel industry is still poor in adaptability to changes in external factors, and can not form closed-loop control. The level of whole-process planning and scheduling needs to be strengthened, most production control needs manual intervention, and the dynamic collaborative scheduling of upstream and downstream of the industrial chain, production - energy - logistics - marketing - services also needs to be improved. From the perspective of breadth and depth, the current digital and intelligent transformation and development of China's iron and steel industry production process is mainly focused on production process optimization, energy consumption reduction, technological innovation and other aspects, and the focus of transformation and development is still around process-based intelligent manufacturing, large-scale personalized customization, remote operation and maintenance services, etc. The penetration rate of digital technology for the entire process of steel production, operation and management is still low, and the breadth and depth of intelligent manufacturing need to be expanded. According to data, as of 2021, nearly 80% of metallurgical enterprises in China have not achieved system integration.

(3) Lack of control of core intellectual property rights, and the problem of "stuck neck" is still prominent

At present, the key technologies and core basic components in the field of intelligent manufacturing in China are still dependent on imports, the core patented technology is also lack of accumulation, and the key common technology breakthroughs in intelligent manufacturing of steel are weak, especially the industrial Internet data integration technology, the key technology of steel manufacturing modeling and simulation, and the key technology of multi-objective collaborative optimization of steel production process are still prominent. So far, China's iron and steel industry in the information system and physical system development, management, integration, innovation capacity is still relatively weak, has not yet formed a highly collaborative technology innovation system mechanism, original innovation research and development investment and investment efficiency need to be improved.

Fourth, suggestions for accelerating the digital transformation of the steel industry

Digital transformation is a profound revolution in industrial development mode and a long-term systematic project. To accelerate the digital transformation of the steel industry, improve the level of digital development of China's steel industry, and promote the deep integration of digitalization, networking, and intelligence with industrial development, it is necessary to be problem-oriented and goal-oriented, rely on new infrastructure support, network sharing and intelligent collaboration, and create a new model of smart service and a third-party steel cloud platform. Build a standard system for intelligent manufacturing in the steel industry, and actively carry out research on industry application standards and key common technologies.

(1) Improve the industry digital standard system, and give play to the leading role of standards

Digital transformation, standards first. The standardization of specifications is an important basis for realizing digital transformation. The lag in the development of current industry standards, especially the inconsistency of data standards, has hindered the smooth advancement of the digital transformation of China's steel industry to a large extent. Only by accurately formulating and applying industry standards for the digital transformation of the steel industry can the data of steel enterprises on the cloud platform be effectively used, stimulate the potential of data elements, and make the digital transformation of the steel industry stable and long-term. To this end, it is necessary to strengthen the research on digital standards for the iron and steel industry, accelerate the construction of digital standards for the iron and steel industry, give full play to the leading role of industry organizations such as iron and steel industry associations and leading backbone enterprises, and establish and improve unified data norms, data dictionaries and data language systems from the characteristics of the iron and steel industry. Promote the formation of systematic standards covering intelligent raw material farms, intelligent sintering, intelligent iron making, intelligent steel making, intelligent steel rolling, intelligent production and marketing flow, improve the relevant systems for the opening of industry digital standards, strengthen the application of standards in the steel industry, develop technologies and scenarios that are compatible with the steel industry ecosystem, and improve the breadth and depth of the integration of data and reality in the steel industry. Promote the digital transformation and upgrading of the steel industry with standards.

(2) Accelerate the construction of intelligent manufacturing infrastructure and promote the development and application of the industrial Internet

New infrastructure such as industrial Internet, big data and artificial intelligence are the basic conditions for the digital transformation of the steel industry. The essence of the digital transformation of the steel industry is to promote the high-quality development of the steel industry through the close combination of industrial Internet, big data, artificial intelligence and the process flow and management characteristics of the steel industry production process and seamless docking. To achieve this goal, we need to make joint efforts at the three levels of countries, platforms and enterprises. At the national level, it is necessary to increase fiscal and tax support for digital "new infrastructure", industrial Internet platform, industrial intelligence networking construction and promotion, common technology research and development and industrialization of the deep integration of the two, and establish and improve data sharing and process interoperability mechanisms. At the platform level, it is necessary to encourage head digital enterprises to actively carry out the construction of industrial Internet and industrial intelligence networking platforms for the steel industry, develop basic common apps with strong universality and high reuse rate, industry general apps and various special apps, actively study the integration path of steel manufacturing and industrial Internet and industrial intelligence networking, and promote equipment networking on the cloud and data integration on the cloud. For steel enterprises personalized customization, intelligent production, network collaboration, service extension to provide a full range of service support. At the enterprise level, iron and steel enterprises should seize the 5G development opportunity, vigorously develop the "Internet +" model, and grasp the three key points of digitization of facilities, intelligent production, and collaboration platform on the basis of improving the four-level information system of basic automation system, production process control system, manufacturing execution system, and enterprise management system. Re-examine the process of design, procurement, smelting, rolling, sales and other links, innovate some management modes that are not suitable for digital production methods, and create conditions for promoting the efficient allocation of the whole industrial chain and all elements of the enterprise to create an extremely efficient smart factory.

(3) Accelerate the breakthrough of a number of key technologies and improve the technical support ability of the digital transformation of the steel industry

Strengthen key technology research, accelerate the industrialization of scientific and technological achievements, improve the ability of independent innovation, and break through the key common technical constraints such as the digital online detection technology of metallurgical process, intelligent control technology of complex steel production process, material flow and energy flow collaborative optimization technology, and global optimization control technology of steel supply chain that restrict the digital transformation of the industry, which require the two-way efforts of the government and enterprises. From the perspective of the government, the government can establish a special fund for the digital transformation of the manufacturing industry covering the steel industry, and support the research and development, demonstration application and industrialization of key technologies for the digital manufacturing of the steel industry through various ways such as free subsidies, loan discount interest, subsidy (guidance) funds, premium subsidies and venture capital. From the perspective of enterprises, iron and steel enterprises should increase research and development investment in key core technologies such as industrial Internet, industrial intelligence networking data integration technology, intelligent modeling and simulation key technology, multi-objective collaborative optimization key technology, and strive to break through and develop information perception and digital technology and equipment under complex conditions of high temperature, high risk and high pollution environment. Multi-sensor data fusion technology and intelligent soft sensing technology, equipment online fault diagnosis and predictive maintenance technology based on the Internet of Things, environmental protection information detection and online monitoring technology, BF process multi-dimensional visualization and operation optimization technology, smelting process intelligent control model technology, billet solidification process multi-dimensional visualization and quality online determination technology, Production process optimization with offline analog and digital simulation technology, the whole process quality dynamic tracking and quality control technology, the whole production process online integrated simulation and optimization technology, procurement, production and sales global supply chain optimization technology. Only by breaking through these "jam neck" key core technologies can we truly make China's steel industrial Internet and industrial intelligence networking platform walk in the forefront of the world, and can we truly realize the transformation of China's steel manufacturing from large to strong.