Speaking at the 15th SteelOrbis "New Horizons in Steel Markets" annual conference being held virtually on December 1-3 due to the Covid-19 pandemic, Simon Yu, vice president of Jiangsu Yonggang Group Co., Ltd, shared information regarding the situation in the Chinese steel industry and expectations for the coming period.
Describing the current year as a year when production and demand increased in the Chinese steel industry, Mr. Yu said that in the January-October period the country’s crude steel production increased by 5.5 percent to 874 million mt. Since the beginning of the third quarter, China started to recover from the effects of the pandemic and achieved production levels which had not been seen in the past few years. For the whole year, China expects a crude steel production of 1.04 billion mt. Looking at consumption, he said that steel consumption in the country totaled 861 million mt in the first ten months, up 10 percent year on year.
Regarding the raw material industry, China produced 975.2 million mt of iron ore, up 11.2 percent in the January-October period, while the country’s scrap imports amounted to 213 million mt in the same period, up 6.5 percent year on year. Answering a question on whether China would resume scrap imports in 2021, the Yonggang Group official said that scrap imports are expected to resume in January, with the relevant procedures being completed. He stated that this will help the Chinese market’s competitiveness. “Ten years ago, we imported 13 million mt of scrap. For 2021, I predict 10 million mt of scrap imports, which is not a lot. Nevertheless, this will support raw material prices in the global market.
According to the figures shared by Mr. Yu, China’s finished steel imports amounted to 17.01 million mt in the January-October period, up by 73.9 percent, and they are expected to reach 19.7 million mt for the full year, rising by 60 percent, both year on year. Semi-finished steel imports, including pig iron, DRI and billet, amounted to 20.61 million mt in the January-October period this year, up 708 percent year on year.
During the given period, China’s steel exports registered a decline for the fifth year in a row amid the effects of the pandemic. This year, the country’s finished steel exports are expected to total 54 million mt, down 16 percent year on year.
Overall, Yu pointed out that China is the only country which has recovered economically from the pandemic thanks to effective measures and the economic stimulus which has helped to increase apparent steel demand in the domestic market. Accordingly, prices also picked up. China is a net importer, he noted, with declining exports and rising imports.
Sharing his predictions for the coming period, Yu said that the Chinese economy is expected to see better growth in the last quarter and the Chinese currency is expected to continue to appreciate. The Chinese economy is foreseen to close the year with a 1.9 percent growth and to see a growth of 8.2 percent in 2021. These growth expectations are well above the expectations for the US, UK and the CIS region. Yu noted that average steel prices in China will see a slight increase in the first half next year, though they will likely weaken in the second half of the year.