China’s actual steel consumption increased 7% on year mainly from the manufacturing and construction sectors, and a further modest rise is expected too for 2021, the China Iron and Steel Association (CISA) shared in a web post on January 27.
Steel demand and output up in 2020 albeit the virus blow
Last year, China’s actual finished steel demand grew by 7% on year, among which, the consumption from the construction and manufacturing sectors increased by 10% and 4% on year respectively, according to CISA, as the China’s economy had been recovering steadily since the second quarter of 2020, which was in line with higher crude steel production in the country.
In pace with the demand revival, China’s steel production increased by quarter, and the third quarter posted the highest 10.3% on-year growth while the output grew even in the first quarter despite the virus strike, up 1.2% on year. CISA did not disclose the actual tonnage of finished steel consumption, but China produced 1.3 billion tonnes of finished steel for 2020, up 7.7% on year.
China’s steel prices also recovered starting May on better demand and posted on-year gains since August until having peaked in the Q4, and CISA’s member steel mills, despite the soring raw material prices of iron ore, coke and scrap especially in the fourth quarter, still saw their total gross profits up 6.6% on year to Yuan 207.4 billion ($32 billion) for the whole 2020.
Steel demand to grow marginally while output curtailed in 2021
With a relatively low base for the gross domestic product (GDP) and its growth for 2020, China’s GDP is expected to pick up the pace in growth in 2021, and this will further boost steel demand, enabling it to gain marginally this year, according to CISA.
At the same time, CISA resonated with the call from the China Ministry of Industry and Information Technology (MIIT) to bring down the country’s steel output for 2021 as part of Beijing’s carbon emission blueprint, to lessen the heavy leaning on the imported iron ore, and to urge the domestic steelmakers for competitiveness enhancement.
Any supply gap could be filled up by either imports or the existing steel stocks, CISA added, expecting China’s steel exports to continue with the downtrend while imports may increase on year for 2021 though the global steel market is still hard to predict with all the uncertainties because of the ongoing pandemic.
For 2020, China exported 53.7 million tonnes of finished steel in 2020, down 16.5% on year while finished steel imports surged 64.4% on year to 20.2 million tonnes, and together with billet imports, China’s net exports in crude steel should have eased 67.6% on year, according to CISA.
On the other hand, China’s iron ore imports grew 9.5% on year to nearly 1.2 billion tonnes, all of which suggested that China’s high steel production in 2020 did not stress the global market, but benefited the world’s ferrous community, it added.
Steel market theme for 2021: lower carbon emission, higher concentration
For 2021, Chinese steel mills, as the second largest carbon emission group, they will need to be consciously bringing down their coal consumption and emission in Beijing’ overall plan for carbon emission peak by 2030 and carbon neutrality by 2060.
For 2020, the composite standard coal consumption in steelmaking among CISA’s member steelmakers went down 1.2% on year to 545.3 kg/t despite higher steel output.
At the same time, mergers and acquisitions with the large-sized steelmakers in the lead will continue and accelerate this year, according to the association, as China’s top ten steelmakers had steadily increased their contribution to the country’s total steel output to 39.2% by 2020, up from 35.9% for 2016 or 36.6% for 2019.
China Baowu Steel Group, the country’s top steelmaker, posted over 100 million tonnes of steel output by 2020 or having overtaken ArcelorMittal as the world’s No.1 steel producer after a series of mergers and acquisitions since 2016, the association highlighted.
Written by Anna Wu, wub@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Image Source: The Financial Express
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