Steel Market Trend

First, strong growth in domestic demand. According to the government work report, the annual GDP growth rate is 2.3 percent, and the actual implementation result is expected to reach 8 percent. According to this estimate, the macroeconomic growth rate this year will increase by at least 5 percentage points. In addition, the government report also called for a steady increase in the consumption of automobiles, home appliances and other major items, the construction of new renovation projects in old urban areas, priority support for ongoing projects, and the promotion of “two new and one heavy” construction. According to statistics, in January this year, the national transportation fixed asset investment growth of 42.1% year on year, the growth trend is very strong. Other steel consumption areas such as metal pipe are expected to be similar.

Second, indirect exports increased significantly. The government work report calls for promoting the stability of imports and exports, including strengthening credit support for foreign trade enterprises, expanding the coverage of export credit insurance, jointly building the Belt and Road Initiative, and deepening growth. China’s steel export environment will be improved, not only its direct export is likely to turn down to rise, especially the indirect steel export driven by appliances, home office supplies, automobiles, medical instruments, construction machinery, containers and other commodities like conduit pipe, will show a strong growth of more than 10 or 20 years. In the first quarter of this year, Chinese ports were busy and containers were at an all-time high.

Third, the output of rectangular steel pipe is still supported by demand. Demand is the direct driving force to pull production, to achieve the government work report this year more than 6% of economic growth, the country’s steel demand is bound to have a relatively large increase, and then the steel production requirements increase accordingly. With GDP growth of 2.3% in 2020, the country’s crude steel output also reached 1.065 billion tons, an increase of 7.0% over the previous year. Even if the carbon emission reduction and steel production policy, the release of steel production will be inhibited, but it will not appear a significant decline.

Fourth, prices rose across the board. On the basis of the booming production and demand, and because of the production promotion and logistics costs, the impact of the depreciation of the US dollar, this year the national steel pipe prices will rise comprehensively, significantly beyond the level of last year. If the growth rate of the national production of steel and finished products can be significantly reduced, to further improve the relationship between supply and demand, it is expected that almost all steel products, almost all commodities in the iron and steel industry chain, will rise, and some will even have skyrocketing situation.