Affected by the colder weather, the market has gradually entered the off-season in demand. The severe situation of the superimposed new crown epidemic has risen again, and various prevention and control measures have been strengthened. In the later stage, the demand for steel in the market is on a downward trend.

(1) The national economy will continue to recover steadily in 2021, and steel demand will remain stable In 2021, the situation of the new crown epidemic is still severe, the uncertainty of the international environment still exists, and the foundation for domestic economic recovery is not yet solid. The World Bank predicted in the latest Global Economic Outlook released in January that the global economy will grow by 4.0% in 2021, a decrease of 0.2 percentage points from the value predicted in July last year. From the perspective of the domestic situation, this is the first year of the "14th Five-Year Plan". The country will further improve its macroeconomic policies, continue to consolidate the prevention and control of the epidemic and the recovery of economic stability, continue to implement a proactive fiscal policy and a prudent monetary policy. Continue to do a good job in the "six stability" work, fully implement the "six guarantees" task, and strive to maintain economic operations in a reasonable area. In 2021, the state will focus on the construction of key areas, focus on the "two new and one heavy" and make up for shortcomings, expand effective investment; accelerate the construction of 5G industrial Internet, big data centers, etc., implement urban renewal, promote the transformation of old urban communities, and operate the manufacturing industry The environment will also be further improved, and steel demand is expected to remain stable.

(2) The release of steel production capacity remains at a high level, and the market balance of supply and demand is under pressure According to data from the National Bureau of Statistics, from January to November 2020, investment in the black smelting, rolling and processing industry increased by 25.4% year-on-year, far exceeding the national fixed asset investment growth of 2.6%, and is facing the possibility of capacity expansion. If the newly-built capacity is released in a concentrated manner, it will adversely affect the balance of market supply and demand. According to statistics from the Iron and Steel Association, in early January this year, member steel companies produced an average of 2.195 million tons of crude steel per day. It is estimated that the country’s daily output of crude steel was 2.9254 million tons. The overall crude steel production remains at a relatively high level.

(3) The social stocks of steel rebounded slightly, and the stocks of enterprises continued to increase Since the beginning of this year, steel stocks have increased, not only due to weakening demand and winter storage by enterprises, but also related to new epidemic control measures. From the perspective of social inventory, according to the statistics of the Iron and Steel Association, in early January, the social inventory of five major types of steel in 20 cities was 7.71 million tons, an increase of 410,000 tons or 5.6% over the previous ten days; from the perspective of corporate inventory, in early January , According to the key statistics, the steel inventory of steel enterprises was 13.03 million tons, an increase of 1.41 million tons over the previous ten days, an increase of 12.1%. The rebound of steel stocks put pressure on the later steel price trend.

The main issues that need to be paid attention to in the later market:

First, the demand is showing a weakening trend, and the balance of supply and demand is facing challenges. As the weather turns colder and steel prices rise, steel demand has weakened. Iron and steel enterprises should pay close attention to market changes, rationally arrange production, adjust product structure as needed, improve product grade and quality, and maintain market supply and demand balance.

Second, the high and fluctuating prices of imported mines have put tremendous pressure on corporate profitability. According to the monitoring of the Iron and Steel Association, as of January 15, 2021, the price of CIOPI imported iron ore (62%) was US$169.34/ton, an increase of 6.41% from the end of the previous month, while the price of steel fell by 0.76% during the same period, which had a significant impact on corporate profitability. huge pressure.

Third, the international situation is still complex and severe, and the difficulty of steel export will further increase. As the overseas epidemic has not been suppressed, the supply chain in the United States and Europe is still blocked, which has a greater impact on economic recovery. Under the background that the pace of new crown vaccination is lower than expected, the recovery of the global supply chain may be further delayed, and the difficulty of my country's steel export will further increase.

Written by Kelly