For 2021, it has been rather normal to see that all China’s key official data such as foreign trade and economic performance have been compared with 2019 other than with 2020, simply as on-year comparison could be misleading given that last year had been anything but a normal year with China having battled fiercely against the outbreak of COVID-19 in most of the first quarter.
So far, the series of comparison against 2019 have suggested China’s economic and industrial activities have been recovering steadily to their normal tracks, and this is very much the case for China’s ferrous market, as suggested by Mysteel’s surveys on all the key indicators such as key prices, finished steel inventories, and blast furnace capacity utilization.
By December 6, Mysteel SEADEX 62% Australian Fines increased on year by 17.2% to $103.25/dmt CFR Qingdao, and China’s HRB400E 20mm dia rebar price rose similarly by 17.4% on year to Yuan 4,823/tonne ($757/t) including VAT, both according to Mysteel’s assessments.
(Source: Mysteel, left: rebar price, right: 62% iron ore pricing index, both over Dec 2019-Dec 2021)
Some may argue that these two ferrous-related prices are still higher than in a normal year such as 2019, but to some extent, this is justified, as the momentum of China’s efforts to rescue economy from the hard blow of the pandemic, just as many other countries, is still existing albeit slowing down from last year, and probably will only disappear sometime in 2022 if Beijing does not renew the efforts.
Besides, the much higher scrap and coke prices amid mismatch of demand and supply have been supportive to the domestic steel prices, and for once in 2021, coke price has come to the centre stage due to its severe stretch in supply mainly due to the limited availability of coking coal when Beijing has asked the domestic coal mines to prioritize thermal coal supply.
China’s coke price, thus, was assessed at Yuan 2,647.1/t over November 21-30, as against Yuan 1,649.7/t in late November 2019, or up 60.5%, according to the data from the country’s National Bureau of Statistics.
One more sign of normality in China’s steel industry is that winter restrictive efforts on a number of polluting industries such as steel have been back in place over the winter of 2021-2022 after a disrupted 2020, though the curbing measures in steel may be harsher for 2021 as Beijing is determined to achieve an on-year decline in steel output for this year.
Blast furnace capacity utilization among China’s 247 steel mills, for example, fell to 74.8% around the end of November-early December as against 87.19% in early December of 2019, while around the same time of 2020, the rate was perching high at around 92.4%, according to Mysteel’s data.
Written by Hongmei Li, li.hongmei@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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