BLOG: China to study 20-year steel prices for reference
The time could be perfect too, as China's steel industry has more or less finished a full cycle of development especially in volume in the past 20 years with undersupply, oversupply and then rectification towards a rather balanced fundamental, and together with the changes in quantity, the domestic steel prices have experienced tides with the fluctuation in raw material costs and changes in industrial and macro-economic policies.
The study to be jointly conducted by the Price Association of China and Mysteel, both with their own set of steel pricing data since 2001 and 2000 respectively, and the findings, hopefully, will assist Beijing with its resolve to achieve a stable and high-quality development in the very industry and national economy in the years to come, Qu Xiuli, vice chairperson and secretary general of the China Iron & Steel Association, was quoted commenting so at the formal launch of the project, according to a WeChat post of the price association on March 1.
It will not be exaggerating to say China's steel prices have been on a roller-coaster ride in the past two decades, as the composite steel pricing index was assessed as 81.33 in April 2001, the earliest record available in the database of the price association, while in May 2021, the record month for most of China's steel prices, the index surged to 174.8, or the highest in the past two decades, Mysteel Global noted from Qu's remarks.
The composite steel pricing index is based on eight steel products including rebar, high-speed wire rod, angles, seamless pipes, hot-rolled coil, cold-rolled coil and galvanized steel and plate.
China's steel output, on the other hand, multiplied to about 1.035 billion tonnes in 2021, compared with 152 million tonnes in 2001, Mysteel Global noted from the up-to-date data from the National Bureau of Statistics (NBS), though the industry has come to a watershed moment too, as the path ahead will be more about quality and probably even downsizing.
The country's latest steel output for 2021, thus, was down 2.8% on year instead of a 3% on-year fall, as NBS' preliminary data suggested, an in its February 28 release, NBS also adjusted up its raw coal output to 4.13 billion tonnes, or up 5.7% on year, compared with 4.07 billion tonnes or a 4.7% on-year gain in its preliminary data, Mysteel Global noted.
The revision in steel output, nevertheless, has not changed the downtrend in China's steel output, and 2022 may well be a year with the domestic steel output flat or down marginally on year, depending on a series of factors including domestic steel demand, steel imports and exports.
The study on steel prices may also well be needed by Beijing with its resolve for stability in supplies and prices of bulk commodities including steel and iron ore especially with 2022 being a year full of challenges for the Chinese steel industry both from home and abroad, Mysteel Global understands.
Among the challenges are that steelmaking raw materials prices may probably perch high, and Chinese steel mills may face rising costs in other aspects such as environmental protection with decarbonization now on the agenda, and the domestic demand for steel is also evolving towards higher quality in accordance with the changes in demand.
Written by Hongmei Li, li.hongmei@mysteel.com
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