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China’s ferrous and steel-consuming sectors such as construction have reported various degrees of disruption to their daily operations by the grand celebration of the 100th anniversary of the founding of the Communist Party of China (CPC) with the formal ceremony to be held in Beijing on July 1, Mysteel Global understood from the related markets on June 22.
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Recently my schedule has been twirling around the conference calls with market sources and companies, which are the best means of staying in touch under the present circumstances, though I always feel that something’s amiss in the whole new working routine dominated by innumerable audio and video calls – the human touch.
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China’s major steel consuming sectors including construction contractors, auto and home appliances manufacturers have been prioritizing on fulfilling their signed contracts, though they have keenly felt the bite from the higher steel prices, and they may continue to endure the pain of higher costs now that prices of both steel longs and flats have spiked in the last few days, market sources shared on May 11.
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The surges in the prices of the series of ferrous products including steel, iron ore, and coke since April, have further divided the ferrous market sources in and out of China on their views regarding the possibility of China’s steel output cuts despite Beijing’s reiterations, as steel demand both in and out of China has been robust and steel margins have been high at Yuan 600-1,000/tonne ($93-155/t) depending on products.
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China’s ferrous market has almost been back to the normalcy by now, as is evident before the Labour Day holiday over May 1-5 when participants in the steel value chain have been into the pre-holiday inventory rebuild mode, though market pundits notice that the persistently high steel and iron ore prices have made it less likely for the restocking in large quantities both because of cash flow constraints and pricing risks.
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China’s ferrous community seems to be in a booming period, as on top of the domestic steel price surges since late March, stocks of both Angang Steel Co and Bengang Steel Plates Co, the Shenzhen-listed arms of the top two steel mills in Northeast China, surged 5.3% and 10% on day on April 7.
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We are almost two months into 2021, and the global iron ore prices have so far appeared rather resilient especially with the serious surges after the Chinese New Year holiday over February 11-17, and with the anticipation of global economic recovery and the recent booms in the steel prices in many countries including China, the worldwide ferrous community is wondering whether the history of 2020 will repeat this year.
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Writer’s remarks: 2021 is holding a personal significance to me, as this year is the 20th anniversary of me being a steel and metals industry journalist, the career that I have pursued with great passion and full of joy. To mark the special year, in the weeks to come I will interview a few in China’s steel industry that, just like me, have witnessed it evolve, for their own stories and their observations.
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Chinese steelmakers have announced intensive maintenance plans recently, and though overhauls are not uncommon during the usual winter lull in business, this year the mills are offering a variety of reasons for taking some major equipment items offline, citing everything from coke shortages to bitter cold.
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Beijing has been working quietly on carbon emission cuts for a few years but its open pledge in 2020 to peak the country’s carbon emission by 2030 and to achieve carbon neutrality by 2060 has undoubtedly imposed more pressure publicly on the steel industry, the country’s second largest carbon emission source only after the thermal coal power generation.
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Hebei, China’s top steel producing province in North China and now the new epicentre of the COVID-19 outbreak in China, has been acting swiftly by curtailing the mobility of the citizens in three of its cities – Shijiazhuang, Xingtai and Langfang, and the local authorities have been fast in blanket swaps tests on the citizens, trying to bring down the number of the new daily cases.
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China’s imports of steel semis over January-August skyrocketed ten folds on year to a total of 11.4 million tonnes, according to data from China’s General Administration of Customs (GACC), and the surge contributed greatly to China’s re-emergence as a net steel importer during June-August for the first time in over a decade.
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In the first eight months of 2020, China imported more energy products such as crude oil,natural gas and coal,according to the latest statistics from the country’s General Administration of Customs published on September 7, and the slowing global economy had sent prices lower.
For crude oil, China imported 368 million tonnes
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A quick look at how China's economy and steel market performed in the first half of 2020.
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After over 42 years of “opening up policy” execution since 1978, China has reignited its economic engine, trying to set up a new economic development model in Xiong’an New Area in North China’s Hebei province, just like the Shenzhen Special Economic Zone back in 1980, and the difference is that Xiong’an is not about trade, it is about eco-friendly and high-end industries and well-designed landscape with digitalization and artificial intelligence being the core elements.
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Click here for part 1 of the feature
High
steel output and stocks to persist in H2
The unsolvable
uncertainties in demand will only lead to the rises in finished steel
inventories on the zealous output, which will test the Chinese steel market
resilience in the latter half of 2020, keeping the market participants always
on their
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After the robust performance in April and May, China’s domestic steel demand may step onto a down slope starting June, and 2020 may end with a 4% on-year decline in total steel consumption, while the supply glut will be even more outstanding against the retreat in consumption in H2, Xu Xiangchun, Mysteel’s senior steel analyst, warned the market at the 3rd Bohai Economic Rim Steel Conference 2020 on June 3, the first large-scale virtual conference that Mysteel held with over 1,000 dial-ins and over 50,000 views.
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China’s “two sessions” in 2020 are of even greater significance than the previous years, as the top two political sessions to start on May 21 and May 22, will not only finalize the country’s series of development tasks including economic growth for this year but will also pan out the 14th five-year (2021-2025) planning period strategy, and many industries including steel are expecting more stimulus measures from Beijing to combat against the impact of the COVID-19.
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If you find it hard to get in touch with your Japanese contacts at 9am Tokyo time though prior to the “Telework” or “working from home” practice, they would have been at the office before 8am, do not worry, they are fine, just that they are still adjusting themselves to this novel working style.
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Click here for part 1 of the feature
How low China’s 2020 GDP growth will dip to?
Before the sudden breakout of COVID-19, it was widely anticipated that China’s GDP growth would not slow down too much from the 6.1% growth achieved in 2019, may be at around 5.8-6% for 2020.
The pandemic,
