In 2020, the supply and demand of China's steel market are both prosperous, and prices have risen sharply. So, what will the steel market trend in the new year? Judging from the current situation, due to the existence of the three supporting forces, the heating up of the Chinese steel market in 2021 will remain unchanged.

  1. Total consumption demand continues to grow steadily

  Driven by the V-shaped macroeconomic recovery, China’s apparent crude steel consumption will increase by about 9% in 2020 (China Iron and Steel Association data). China's economy will rebound strongly in 2021. The mainstream view is that its annual GDP growth rate will be around 8%. Recently, the International Monetary Fund (IMF) has raised its global economic growth forecast for 2021, raising the previous growth rate of 5.2% to 5.5%, and believes that China and the United States have the strongest recovery. In the new year, the domestic and international economy has accelerated significantly, which has laid a solid foundation for the steady growth of China's total steel demand. At the same time, China's decision-making departments have exerted their fixed asset investment steady growth effect unchanged. Against this macro background, it is expected that the apparent consumption of crude steel across the country will exceed 1.06 billion tons, an increase of more than 2%.

    2. Steel production will decline under the carbon peak target

  Recently, Huang Libin, spokesperson of the Ministry of Industry and Information Technology and Director of the Operation Monitoring Coordination Bureau, introduced that steel production reduction is an important measure for my country to achieve the goal of carbon peaking and carbon neutrality. The Ministry of Industry and Information Technology will promote the reduction of steel production in many aspects. The Ministry of Industry and Information Technology will study and formulate relevant work plans to ensure a full year-on-year decline in steel production in 2021. According to statistics, my country's crude steel output in 2020 is 1.053 billion tons, an increase of 5.2% year-on-year. If the national steel output declines in 2021, no matter how much the decline is, the market supply-demand relationship will be improved while the total demand (including direct exports) continues to grow steadily, which will become a new bullish for China's steel market in the new year. factor.

  3. The U.S. dollar depreciated significantly

  In the past year, the U.S. dollar has depreciated to a certain extent, which is one of the important factors for the rising cost of steel production and logistics in China. Comprehensive analysis of various situations, it is expected that the dollar will continue to depreciate in 2021. This has become a market consensus. The only difference lies in the extent of the depreciation of the dollar. Stephen Roach, the former chairman of Morgan Stanley Asia, even predicted that the dollar will depreciate by 35% by the end of 2021. Roach believes that the sharp expansion of the US current account deficit and the inability of the Fed to do anything about the depreciation of the U.S. dollar are the main reasons for the continued sharp depreciation of the U.S. dollar. If the U.S. dollar really depreciates by such a large margin in 2021, the price fluctuations of commodities in the international market will be very dramatic. Regarding Mr. Roach's "warranty", we really can't take it lightly. We must know that there have been many catastrophic and sustained devaluations of the dollar in history. Among them, from 1985 to 1988, the dollar index fell by 40% in 37 months; from 2002 to 2004, the dollar fell by 30% in 34 months. Of course, whether the U.S. dollar will actually depreciate by 35% in the new year, as Roach said, remains to be tested by the market, but as long as the U.S. dollar depreciates, it will stimulate the international market for iron ore, scrap, coking coal, oil and gas and other steel smelting raw materials and energy prices. The rise has stimulated a corresponding increase in its shipping prices and a corresponding increase in domestic logistics costs. It will eventually increase the production and logistics costs of China's steel and finished products. It will become an important support force for the high price of China's steel market in the new year and an important reason for the continued heating up of the steel market. Supporting strength.