Despite volatile steel and iron ore prices observed in the recent days in China, it is expected that the overall steel demand would remain strong and increase further in line with the target of the GDP growth at more than 6pc for 2021, said the President of the China Metallurgical Industry Planning and Research Institute Li Chuangxin to local media.
The country is also gearing up to have carbon emissions in the steel sector reach a peak in 2025, according to a statement from China’s Ministry of Industry and Information Technology. The country has set a climate goal of carbon neutrality by 2060. China plans to have carbon emissions from all sectors reach a peak in 2030, according to the government work report released during this year’s NPC session.
With the start of China’s 14th Five-Year Plan period (2021-25), the country is expected to cut steel production in other major cities followed by Tangshan. There could be as much as 30mn mt of pig iron production cut in the coming years. The country would shift to more steel imports and boost the consumption of scrap amid green steelmaking campaign.
China’s largest steelmaking hub Tangshan in the Hebei province has announced stricter production curbs to manage rising pollution and protect the environment. This pulled iron ore prices sharply down on declining consumption. However, the Chinese government believes that an investment-driven economic structure might help the country’s steel demand to grow in 2021.
Steel demand to stay strong
Due to a plunge of over 7-10pc in steel futures, there were emerging concerns about future demand for steel in China. Industry participants, however, opined that the drop in steel futures was not due to a bleak demand outlook rather it was due to the rising global supply, capital boosts and shipping challenges.
Despite production curbs, Chinese domestic billet prices touched a new 10-year high. The prices for Q235 150mm square billet -price in Tangshan in Hebei province hit CNY4,620/mt ($709/mt), up by CNY360/mt since the start of March. Asian steel and raw material prices are thus expected to bottom very soon, sources informed Davis Index. Steel futures have already recovered to the levels lost last week.