Steel prices in China will rise in 2021

China's domestic steel market will see higher prices in 2021, especially in the first half of the year, given the possibility of a relatively tight supply-demand balance on December 19, according to a discussion at the annual Mysteel Summit in Shanghai. Raw material prices will also support the steel market, the panelists say.

“We are in a post-pandemic era and with the use of vaccines, the resumption of all activities around the world is likely to occur in 2021. Meanwhile, the reform of domestic demand will lead to an increase in domestic consumption, ”said Chen Xiaowen. , deputy to SGIS Songshan, a steel company based in Shanghai. “And with the start of China's 14th Five-Year Plan (2021–2025) and a new“ five-year cycle ”, the country's exports, investment and consumption will grow. So I see that domestic demand for steel continues to grow as well, ”he said.

Starting next year, the Chinese government will begin implementing a new policy to decommission existing steel facilities and swap them for new ones, Chen said, saying the new policy could slow the growth of new steel facilities. “As a result, in my opinion, next year the supply and demand for steel will be relatively well balanced. These conditions, as well as high raw material prices combined, will drive steel prices to high levels in 2021, ”he commented, adding that the average price could increase by more than 5% year on year.

As of December 18, the national price for HRB400 20mm diameter rebar in China was RMB 4,231 /t (US $ 647.7 /t) including 13% VAT, according to Mysteel estimates, much higher than the average since January in the amount of 3806 yuan per ton, Mysteel Global Notes.

Xie Chao, deputy general manager of Chongqing Iron & Steel, agreed with the rise in steel prices. “2021 is the beginning of China's 14th five-year plan, when the country will enter a new stage of quality development, therefore, from my point of view, the balance of supply and demand for steel may be relatively tight next year,” he said. adding that flat steel prices may rise more than long products.

Most other delegates' comments indicate that they too expect domestic steel prices to rise in 2021, especially in the first half of the year. Other reasons included a possible short-term mismatch between supply and demand for steel in many other countries - not just China - due to a faster recovery in demand, and also due to the presence of large capital in the market as a result of quantitative easing. and the relaxation of monetary policy imposed by many governments.

As for raw materials, most of the delegates present at the panel discussion are still