Is the price of steel expected to decrease in 2021?

The possibility of a reduction in steel prices in 2021 is relatively small. In March this year, the price of steel rose slightly. Since late April, the price of steel has soared. The price of steel in early May was even higher than that in April. In addition, according to the latest weekly report on China's steel prices, the western rebar price index at the end of April was 5,146 yuan a ton, an increase of nearly 400 yuan a ton from the end of March. Why is the price of steel rising so fast?

Reason 1: Cost increase 　　 

Generally speaking, the price of steel is determined by a combination of factors such as supply, demand, cost, and external environment. Since the beginning of this year, the combination of high demand and high cost of raw materials, international monetary easing policies, environmental protection and production restriction policy requirements, capital market speculation and other factors have promoted the rapid rise of steel prices.

Reason 2: Consumption peak season 　　

In the first quarter, the actual steel consumption of the main steel industry increased by 47%, of which the construction industry increased by 49%, and rebar continued to be the most inventory reduction product. At the same time, foreign steel demand has gradually improved, and the strong export growth of mechanical and electrical products has significantly driven steel exports. The weather conditions in the second quarter were good, and it was still in the peak season for steel consumption.

Reason 3: Tariff adjustment has been implemented

On April 28th, the iron and steel import and export tariff adjustment policy was implemented to guide the steel industry to reduce crude steel output. Just after the May Day holiday, the new version of the “Implementation Measures for Capacity Replacement in the Iron and Steel Industry” was released, and the ratio of steel capacity replacement was obviously tightened.

What is the trend of steel prices in the second half of 2021?

Affected by many factors, the price of steel products is unlikely to fall significantly in the second half of 2021, and it will continue to operate at a high level throughout the year.

From the perspective of demand, due to the rapid and large increase in steel prices in the early stage, downstream steel industries such as shipbuilding and home appliances cannot withstand the continued high steel prices, and it is difficult for the steel prices to continue to rise sharply in the later stage.

In the long run, the adjustment of iron and steel import and export policies will help reduce dependence on imported iron ore and adjust domestic supply and demand; the new version of the "Implementation Measures for Capacity Replacement in the Iron and Steel Industry" will promote structural adjustments in the iron and steel industry and further increase concentration.

Generally speaking, the possibility of a reduction in steel prices in 2021 is relatively small, mainly due to factors such as policies and costs.