company news about The steel market is off to a solid start this year

China's steel market is off to a solid start this year. According to statistics, the national steel market demand increased steadily in the first two months, while the supply and demand decreased significantly, and the social inventory fell. Because of the improvement of supply and demand relationship and the increase of cost, the price fluctuates upwards.

1. The growth of the downstream steel industry has accelerated, and the demand for steel has increased steadily

Since the fourth quarter of last year, decision-making departments have successively introduced a series of measures to stabilize growth, such as speeding up the approval of investment projects, reducing the deposit reserve ratio, cutting interest rates in some areas, and issuing local bonds in advance. Many steel-consuming products have accelerated, and exports have also exceeded expectations. According to statistics, in the first two months of this year, the national fixed asset investment (excluding farmers) increased by 12.2% year-on-year, and the added value of industrial enterprises above designated size increased by 7.5% year-on-year, both showing a rapid growth trend, and there is still an acceleration. Among some important steel-consuming products, from January to February, the national output of metal cutting machine tools increased by 7.2% year-on-year, the output of generator sets increased by 9.2% year-on-year, the output of automobiles increased by 11.1% year-on-year, and the output of industrial robots increased by 29.6% year-on-year. It can be seen that this year, the domestic demand for steel in the country has grown steadily. At the same time, the total export value of the country increased by 13.6% year-on-year, achieving a double-digit growth trend, especially the export of mechanical and electrical products increased by 9.9% year-on-year, and the indirect export of steel is still strong.

2. Both domestic production and imports have declined, and resource supply has further decreased

While the demand side is growing steadily, the supply of new steel resources across the country has dropped significantly. According to statistics, in the first two months of this year, the national crude steel output was 157.96 million tons, a year-on-year decrease of 10%; the steel output was 196.71 million tons, a year-on-year decrease of 6.0%; in the same period, the country imported 2.207 million tons of steel, a year-on-year decrease of 7.9%. Based on this calculation, the new resources of crude steel in China from January to February 2022 will be about 160.28 million tons, a year-on-year decrease of 10% and a decrease of nearly 18 million tons. Such a large reduction is rare in history.

3. The relationship between supply and demand has improved significantly and costs have increased, and steel prices have fluctuated upwards.

Since the beginning of this year, the stable growth of demand and the relatively large decline of new resources have made the relationship between supply and demand improve significantly, thus driving the decline of steel inventories. According to statistics from the China Iron and Steel Association, in the first ten days of March this year, the steel inventory of key national iron and steel enterprises fell by 6.7% year-on-year. According to the market monitoring of Lange Steel Network, as of March 11, 2022, the social inventory of steel in 29 key cities across the country was 16.286 million tons, a year-on-year decrease of 17%.

On the other hand, the rise in the prices of iron ore, coke, and energy since the beginning of this year has also increased the cost of steel production nationwide. According to the market monitoring data of Lange Steel Network, as of March 11, 2022, the pig iron cost index of iron and steel enterprises was 155, an increase of 17.7% compared with the end of last year (December 31, 2021), and the cost support of steel prices continued to increase.

Due to the promotion of the above two aspects and the background of global inflation, the national steel prices have fluctuated upwards this year. According to the market monitoring data of Lange Steel Network, as of March 15, 2022, the national average price of steel was 5,212 yuan/ton, an increase of 3.6% from the end of last year (December 31, 2021).