MPI: China’s steel demand to add 1% in 2021, imports/exports to return to normal

Tuesday, 22 December 2020 14:15:48 (GMT+3)   |   Shanghai

The China Metallurgical Industry Planning and Research Institute (MPI) has issued its steel demand forecast for China in 2021, announcing that China’s steel demand will amount to 991 million mt in 2021, up 1.0 percent year on year.

The MPI said that in 2020 China’s steel consumption will reach 981 million mt, up 9.6 percent year on year. The expected slowdown of growth in steel consumption next year is attributed to an easing in the construction sector. The steel demand from construction in China is expected to rise by one percent to 580 million mt, compared to a 13.4 percent hike in 2020.

China’s crude steel output will likely total 1.05 billion mt in 2020, up 5.4 percent year on year, which will be the first time China’s crude steel output will exceed 1 billion mt. The crude steel output in 2021 will reach 1.065 billion mt, up 1.4 percent year on year. Meanwhile, China’s gross domestic product (GDP) is expected to increase by 8.2 percent year on year in 2021, which will push up crude steel output, steel prices and steel consumption in the coming year.

The MPI also forecast that the global steel consumption in 2020 will amount to 1.747 billion mt, down 2.5 percent, while reaching 1.833 billion mt in 2021, up 4.9 percent year on year.

It is thought that iron ore consumption in China in 2021 will decrease by 1.2 percent to 1.38 billion mt, while iron ore imports are expected to drop by 2.7 percent to 1.14 billion mt. The main reasons behind lower iron ore demand will be higher scrap usage and the continuing environmental policy of China.

It is also forecasted that finished steel prices may rise by 5-7 percent year on year in 2021.

Luo Tiejun, vice president of the China Iron and Steel Association (CISA), stated that the development of the steel industry will face both opportunities and challenges in the coming year. China’s steel imports and exports will likely return to normal amid the recovery of the global economy.

In the recent period, iron ore prices in the spot market and futures market have hit new historical highs. Moreover, coke prices have experienced nine rounds of price increases, up by RMB 450/mt ($69/mt). The sharp rises in iron ore and coke prices have exerted a negative impact on the steel market, he added.

However, Mr. Luo said that iron ore prices may edge down next year, though they will stay at high levels, which will continue to provide solid support for steel prices.

$1 = RMB 6.5387

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