China's crude steel demand next year may reach 1.1 billion tons -- one of the prospects of China's steel market in 2021

In the past year, China's steel market volume continued to expand, and the total consumption demand (including direct exports, the same below) jumped to a new level of 1 billion tons of crude steel, achieving a historical breakthrough.It is expected that the total steel market demand will continue to grow steadily in the New Year, possibly reaching 1.1 billion tons, reaching a new high.

１．next year steel demand structure continues last year two big characteristics

By 2020, due to the correct leadership of decision-making departments, the epidemic situation has been effectively controlled across the country, and economic activities have recovered rapidly and shown a positive trend.According to the INTERNATIONAL Monetary Fund, China's economy will grow by 9.2% in 2021, 7 percentage points faster than that in 2020.Even according to the national Bureau of Statistics' margin projections, China's economy will grow at more than 5 per cent in 2021, at least three percentage points faster than the previous year.Under its influence, important economic indicators such as industrial added value and fixed asset investment will also accelerate correspondingly in the New Year. The growth rate of China's economy and major economic indicators will accelerate significantly in the New Year, which lays a solid foundation for the stable growth of China's steel consumption demand in 2021.

It is expected that in the New Year, policy makers will continue to take infrastructure investment as an important starting point for steady economic growth, while real estate investment will continue to grow at a relatively high rate, which will further strengthen China's domestic consumption of steel in 2021.

In addition, according to the latest statistics of China Construction Machinery Industry Association, in October, the 25 main engine manufacturing enterprises included in the statistics sold a total of 27,331 sets of mining machinery products, with a year-on-year increase of 60.5%.This is the excavator sales data for seven consecutive months year-on-year growth of more than 50%.Excavator sales continue to maintain high growth, indicating that China's infrastructure investment projects intensive construction, infrastructure investment growth further accelerated.This not only indicates that the New Year steel domestic total demand continues to be strengthened, but also means that construction steel in the total demand for a strong position.

It can be seen that the steel demand structure in China in 2021 will continue the two characteristics of the previous year: 1.Domestic demand is highlighted in aggregate demand;2. The demand for construction steel is prominent in the domestic demand.

2. The external demand environment has also improved

In 2021, macro economy will accelerate generally, including domestic and global two aspects.The INTERNATIONAL Monetary Fund forecasts that after the world economy shrinks by 4.4 percent in 2020, it will grow by about 5.2 percent in 2021.Goldman Sachs also expects the global economy to show a more "V-shaped" recovery than widely expected.With high hopes for the coVID-19 vaccine, the rebound could now be bigger than expected.Goldman Sachs therefore expects global GDP to grow by 6% in 2021 (the consensus forecast is 5.2%).

While the macro economy is expected to recover, the global manufacturing sector is also showing a positive trend.According to a report released by the China Federation of Logistics and Purchasing, the global manufacturing PMI in October 2020 stood at 54.5%, up 1.6 percentage points from the previous month, and remained above 50% for the fourth consecutive month.PMI of Manufacturing industries in Asia, Europe, The Americas and Africa all increased to different degrees compared with the previous month, and their indexes all remained above 50%.The change in the index showed the global manufacturing sector continued its recovery trend and the pace of recovery accelerated from the previous month.

Large fiscal stimulus packages and no exit from ultra-loose monetary policy are expected in the US and Europe in the New Year.Analysts, for example, expect a $1tn fiscal stimulus package ahead of the Presidential inauguration on January 20.Goldman Sachs expects central Banks in developed markets to remain dovish over the next few years, with the Federal Reserve, European Central Bank and Bank of England starting to raise rates again only in 2025.

Due to the widespread use of vaccines, the world economy has seen a light at the end of the day. In 2021, the global manufacturing trend is improving, and the European and American countries have large probability facilities and large-scale fiscal stimulus programs. All these are good news for the world's steel demand and the improvement of China's external demand environment, especially in the indirect export of steel.In 2020, China's indirect steel export situation is much better than expected.In the first 10 months of this year, China exported 8.45 trillion yuan of mechanical and electrical products, up 3.8 percent, accounting for 59 percent of the total value of exports, according to customs statistics.It is expected that due to the impact of the epidemic on the production of mechanical and electrical products in Europe and the United States in the New Year, the substitution effect of China's mechanical and electrical products export will be enhanced, which will stimulate China's mechanical and electrical products export speed up, resulting in the indirect export of steel to be strengthened.

It is concluded that the national steel consumption demand will continue to grow in 2021.The apparent consumption of crude steel is expected to exceed 1.06 billion tons, an increase of more than 4%.It is estimated that the annual crude steel direct export (steel conversion) of about 80 million tons, the export level from the drop to rise.Together, it is estimated that China's total crude steel demand in 2021 will reach 1.1 billion tons, up by about 5% over the previous year.