Economic recovery and weakening dollar boost steel demand

He estimates that the average steel price this year will be 15 percent higher than last year.

Domestic demand and steel prices are expected to rise this year on the back of a global economic recovery.

In addition, the expectation that the US dollar will continue to depreciate adds to the excitement in the market, they said.

Chen Kexin, chief analyst at Lange Steel's research center in Beijing, predicts China's apparent steel consumption will exceed 1.06 billion metric tons this year, up more than 4 percent from the previous year.

“The anticipated acceleration of economic recovery in both China and the rest of the world will provide a solid foundation for growth in China's steel demand and exports,” he said, explaining that the recovery in growth was driven largely by the deployment of COVID-19 vaccines. and the expansionary monetary policy adopted by many large economies.

Key forecasts for China's GDP growth this year are around 8 percent, a sharp jump from 2020, which assumes a low base. The global economy is also forecast to recover from a deep recession last year.

The Organization for Economic Co-operation and Development estimates in December 2020 that vaccination campaigns, coherent health policies and government financial support are expected to increase global GDP by 4.2 percent this year after falling 4.2 percent in 2020.

Some experts believe the recovery will be stronger if vaccines are introduced more quickly, which will increase confidence and reduce uncertainty.

In late January, the International Monetary Fund raised its estimate of global economic growth to 5.5 percent this year, reflecting expectations for increased vaccine-based activity at the end of the year and additional political support in several large countries.

Chen said that the depreciation of the US dollar is also driving up domestic steel prices and imports.

The US dollar index fell 6 percent last year and the US dollar is likely to continue to depreciate this year due to low interest rates and huge fiscal stimulus spending.

In other words, the cost of raw materials for Chinese steel mills, which are largely dependent on imports, will rise, leading to higher prices for finished steel products, he said.

In addition, a large inflow of foreign investment is expected to lead to higher prices for steel futures, given the politically driven rise in liquidity in several large countries. China's strong economic recovery makes it more attractive for foreign investment, he said.

He predicted that the average price of imported