2021 is the 100th anniversary of the founding of the party and the beginning of the "14th Five-Year Plan". After my country has built a moderately prosperous society in an all-round way and achieved the first centenary goal, we will embark on a new journey of building a socialist modern country in an all-round way and march towards the second centenary goal. In the next year, my country’s economy will continue to maintain a steady and positive trend. Under the new development pattern, there are many opportunities in the steel market. The author predicts that black products are expected to usher in a rebound in 2021, and steel prices will rise slightly compared with 2020.

my country's economic operation will be stable and progress

Considering that this year’s macro-level benefits are numerous, the author predicts that my country’s GDP growth rate is expected to reach over 8%. Specifically, this year's macro policy level will show the following characteristics:

First, the dual-cycle development strategy remains unchanged. The main driving force of my country's economic growth comes from consumption and manufacturing. During the "14th Five-Year Plan" period, the country must unblock the domestic cycle and promote the domestic and international dual cycles. In 2021, the country will continue to expand domestic demand and increase consumption stimulus.

The latest data show that China's manufacturing PMI (Purchasing Managers Index) reached 50.6% in February, which was 0.7 percentage points lower than that in January, and was above the critical point (50%) for 12 consecutive months. It is expected that in 2021, my country's manufacturing PMI will continue to be above the line of prosperity and decline. It is expected that consumption and manufacturing investment in 2021 will both increase by about 10% year-on-year.

Second, the macro policy will shift from "counter-cyclical adjustment" to "cross-cyclical adjustment."

Third, the trend of maintaining loose policies will not change, but it will enter the marginal tightening. The Central Economic Work Conference proposed that a proactive fiscal policy and a prudent monetary policy should continue to be implemented in 2021, with special emphasis on the need to "not make a sharp turn." As my country's economy continues to improve, it is expected that the fiscal deficit rate will be reduced from 3.6% to about 3% this year, and the new special debt limit will shrink from 3.75 trillion yuan to 3.5 trillion yuan, or special treasury bonds will no longer be issued; social financing The growth rate is expected to reach about 11%, and the growth rate of M2 (broad money supply) will remain between 8% and 10%.

Generally speaking, my country's economy will continue to maintain steady growth in 2021, and the steel market will operate in a good environment.

It is imperative to compress crude steel output

In 2020, China’s crude steel output hit a record high, breaking through 1 billion tons for the first time to 1.065 billion tons, a year-on-year increase of 7.0%. This trend may usher in a turning point this year. Since the end of last year, resolutely reducing crude steel output and ensuring a year-on-year decline in crude steel output has become a new issue for the steel industry. On March 1, the Minister of Industry and Information Technology Xiao Yaqing answered whether there is a contradiction between China’s crude steel demand growth and crude steel output compression, saying that the smelting capacity will be greatly reduced; standards must be raised, product performance improved, and the total amount unchanged. , The amount of steel used per unit is further reduced, such as strength and toughness, and the variety and quality of steel are further improved.

At the press conference of the Information Office of the State Council on January 26, Huang Libin, spokesperson for the Ministry of Industry and Information Technology and director of the Operation Monitoring and Coordination Bureau, also stated that the reduction of steel production is to implement the goal of my country’s carbon peak and carbon neutrality tasks proposed by General Secretary Jin Ping. Important move. The next step of the Ministry of Industry and Information Technology is to promote the reduction of steel output from four aspects: prohibiting new steel production capacity, improving relevant policies and measures, promoting steel industry mergers and reorganizations, and resolutely reducing steel output, so as to ensure a full year-on-year decline in steel output in 2021. In addition to macro-control at the policy level, factors such as the introduction of production capacity replacement policies and the normalization of environmental protection control will also inhibit the release of steel production capacity.

Steel demand for six major industries can be expected

From the perspective of demand, the author predicts that global steel demand in 2021 will increase by 4.9% year-on-year to 1.833 billion tons, of which China's domestic steel demand in 2021 will increase by 1% year-on-year to 991 million tons.

In 2021, my country's economy and fixed asset investment will continue to maintain rapid growth, and the demand for construction, machinery, automobiles, energy, home appliances, railways, containers and other industries will still increase. It is expected that my country's total steel demand will increase slightly in 2021. Especially the demand for steel in the six major industries is worth looking forward to.

One is a steel structure. In 2021, my country's steel structure industry will continue to maintain rapid development. As the proportion of prefabricated buildings in the country's new buildings continues to increase and the scale of "new infrastructure" investment expands, UHV construction and 5G base station construction involving steel structure requirements have brought huge potential demand. Among them, in terms of UHV construction, it is expected to drive social investment over 900 billion yuan, and the overall scale will exceed 1.3 trillion yuan.

The second is pipeline steel. After the official operation of the national pipeline network in October 2020, relevant oil and gas pipeline construction projects have accelerated. The main planned projects include West-East Gas Pipeline 4 and 5, New Gas Pipeline (Xinjiang Coal-to-Gas Export Pipeline Project) and LNG ( Liquefied natural gas) export pipelines, etc. At the same time, the state will speed up the construction of public health system and related facilities, as well as new urbanization construction such as flood control and drainage facilities, and old community reconstruction. It is expected that the domestic pipeline market investment and construction will be further increased in 2021, and there is a large room for growth in demand for pipeline steel. 

The third is container steel. The equipment and storage tanks of Zhejiang Petrochemical Phase II, Shenghong Petrochemical, Hengli Petrochemical Phase II and other projects currently under construction have brought demand support for container steel, and steel demand for boilers, tank cars and other industries remains stable.

Fourth is steel for railways. Entering 2021, the "eight vertical and eight horizontal" high-speed railway network will be encrypted. Considering that the key tasks of railway construction will be tilted towards high-speed railways and inter-city railways, it is expected that the steel demand for urban rail and high-speed railways will reach more than 25 million tons this year.

Five is steel for drilling tools. In 2020, under the influence of the spread of the new crown pneumonia epidemic and the "oil war", the international demand for crude oil has dropped significantly and prices have fallen sharply. With the gradual weakening of the impact of the epidemic this year, the global resumption of work and production has returned to normal levels. Crude oil demand is expected to increase substantially in 2021 compared with 2020, which will further promote the increase in demand for drilling tool steel.

Sixth, container steel. With the recovery of the world's major economies, my country's export situation will continue to improve. It is expected that the global container trade volume will rebound sharply in 2021, which will promote the increase in steel demand for the container industry.

Steel raw material prices may remain high

The author predicts that the price of iron ore will remain high and fluctuate in 2021, and the annual average price will reach around US$120/ton. The supply of iron ore will increase substantially. It is expected that in 2021, the output of Brazilian mines will increase by 25 million tons, the output of Australian mines will increase by 10 million tons, the output of mines in other countries will increase by about 24 million tons, and the output of domestic mines will increase by about 10 million tons.

At the same time, demand for iron ore will also increase. The author predicts that global pig iron production will reach 1.346 billion tons in 2021, an increase of 60 million tons year-on-year, bringing an increase in iron ore demand to 96 million tons. Among them, overseas pig iron production increased by 40 million tons, and my country's pig iron production increased by 20 million tons.