XVII
Steel Development Strategy Conference,
hosted by SteelHome, was successfully held in Shanghai Tower during 9-11
April, 2021. Over 1,000 delegates from governments, associations, steel
mills, miners, traders, research institutes and media attended.
Xia
Shiqing, Chief Analyst and Senior Technical Director of Maanshan Iron
& Steel Co., Ltd, delivered a speech titled Market Logics and Trading
Tips with Possible Production Cut and Rebate Adjustment.
Mr.Xia
is delivering the speech
Summary
The
background of production cutbacks and export rebate: 1) China steel
industry is seeing the end of “golden age”, and walking into
high-quality development state; 2) crude steel capacity has sharply
escalated.
Ministry
of Industry and Information Technology (MIIT) vows to control steel
capacity and production, and is expected to publicize the countermeasures
soon.
China
may adjust steel export rebate, and sustain the import/export tariff
unchanged. However, the rumor has already triggered international steel
market.
In
2020, the steel export from China only accounted for 5.14 percent of
domestic demand, and net export merely accounted for 3 percent. The
possible adjustment in steel export rebate will have little impact on the
production in 2021. The impact of the policy against price may be
determined by products involved, tax range, seaborne demand and price
spread between China and the international market.
China’s
steel export takes roughly 12.22 percent of global trade. It is about 18
percent with reduction of internal trade within EU, and may play a huge
effect on world market with the policy.
Current
market background: 2021 is the 100th anniversary year for
Communist Party of China, the year to see the realization of the first 100th
year target (building a moderately welfare society), the year seeing the
kickoff of 14th-Five-Year Plan, and the year reporting
complicated and severe global situation. Steel industry may take the lead
in Chinese sectors to realize carbon peaking and carbon neutralization.
At
the moment, Chinese economy is quickly recovering, with the lofty demand
at home and abroad as seaborne buyers are restocking steel. There is still
room for Chinese steel to export as international steel prices are higher
than China’s.
Mr.Xia
predicts that China’s steel demand will turn to ‘relatively stable’
in the future, with the cut in both supply and demand.
The
current steel price is showing the signal of risks. Steel price in the
second quarter may find it difficult falling, on the back of robust
demand. The focus is suggested to be on the price downfall risk once the
demand cools down.
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