China’s crude steel production analysis and June steel market forecast
In April 2021, China’s average daily crude steel output was 3,261,700 tons, a record high, and it is estimated to reach 3.3 million tons in May. In May, the price of China’s steel market showed a trend of rising and falling. Affected by factors such as the southern rainy season and strict speculation, demand for steel products in June may behave generally, but supply may show a slight expansion trend, and the supply-demand relationship in the steel market may be relatively balanced. The futures market continues to lead the spot market, and steel prices may fluctuate in June. Beware of the risk of chasing ups and downs.
1. China’s daily average crude steel output hit a record high in April
According to data from the National Bureau of Statistics of China, in April 2021, China’s crude steel output was 97.846 million tons, a year-on-year increase of 13.4%; pig iron output was 75.972 million tons, a year-on-year increase of 3.8%; steel output was 121.275 million tons, a year-on-year increase of 12.5%.
From January to April of 2021, China’s crude steel output was 375 million tons, a year-on-year increase of 15.8%; pig iron output was 307 million tons, a year-on-year increase of 8.7%; steel output was 453 million tons, a year-on-year increase of 20.1%.
In April 2021, China’s average daily output of crude steel was 3,261,700 tons, an increase of 7.5% from the previous month; the average daily output of pig iron was 2.5323 million tons, an increase of 5.0% from the previous month. Following the tradition of previous years, the downstream steel industry resumed operations in April, coupled with the high-profit stimulus of the steel industry, steel mills are also working hard to ensure supply. But, under the constraints of environmental protection and “de-capacity”, the growth rate of blast furnace pig iron production in April was low compared with the previous month.
2. China’s apparent crude steel consumption from January to April was 356 million tons, a year-on-year increase of 15.4%
According to data from the National Bureau of Statistics of China and the General Administration of Customs, in April 2021, China’s crude steel output was 97.846 million tons, and the net export of steel was 6.799 million tons, equivalent to 7.082 million tons of crude steel (steel was converted to 0.96), and the net import of billets and ingots was 87.5 The apparent consumption of crude steel was 91.64 million tons, a year-on-year increase of 12.8%. (Note: China’s crude steel production in April 2020 was revised to 86.28 million tons, and apparent crude steel consumption was revised to 81.23 million tons.)
From January to April in 2021, China’s crude steel output is 375 million tons, and the net steel export is 20.763 million tons, which is equivalent to 21.628 million tons of crude steel net export (steel is converted at 0.96). The net import of billets and ingots is 3.233 million tons. The clear consumption of crude steel The volume was 356 million tons, a year-on-year increase of 15.4%. (Note: From January to April 2020, China’s crude steel production is revised to 323 million tons, and the clear consumption of crude steel is revised to 309 million tons.)
3. China’s steel output from January to April was 453 million tons, a year-on-year increase of 20.1%
Omit steel products, from January to April 2021, China’s steel output was 453 million tons, a year-on-year increase of 20.1%. Among them, the output of steel bars was 87.02 million tons, a year-on-year increase of 16.9%; the output of wire rods was 53.477 million tons, a year-on-year increase of 14.1%; the output of cold-rolled sheets was 14.412 million tons, a year-on-year increase of 27.8%; the output of medium-thick and wide steel coil was 61.225 million tons, a year-on-year increase of 18.1 %; The output of welded steel pipe was 17.375 million tons, a year-on-year increase of 24.9%.
In April 2021, the national average daily output of steel bars, wire rods, medium-thick and wide steel strips, and cold-rolled sheets was 789,000 tons, 472,000 tons, 539,000 tons, and 132,000 tons, an increase of 48,000 tons and 28,000 tons from the previous month. Tons, 57,000 tons and 2,000 tons; the average daily output of welded steel pipes was 185,000 tons, the same as last month. It is expected that the average daily output of major steel products will continue to increase month-on-month in May.
4. Pre-judgment and impact analysis of crude steel output in the later stage
In May 2021, China’s steel market prices showed a trend of rising and falling. In early May, there was a strong atmosphere for speculative speculation in the market, and steel prices continued to rise sharply, resulting in a sharp increase in downstream production cost pressures, affecting their normal operation and production. As the Chinese government has done a good job in ensuring the supply of bulk commodities and stabilizing prices, the relevant regulatory authorities have investigated abnormal transactions and malicious speculation, and steel prices have returned rationally in mid-to-late May.
Looking forward to the steel market in June 2021:
Demand-side: At the end of April this year, the growth rate of M2 and social financing dropped, and the current monetary policy is in an environment of “tight credit and stable currency”. At the same time, the year-on-year growth rate of fiscal expenditure continued to slow down from January to April, and fiscal revenue has resumed growth. This year, fiscal expenditure may be slower than before, and more attention will be paid to effective investment. Under the influence of macroeconomic policies that do not pursue strong stimulus and the influence of high temperature and rainy weather, China’s steel demand may perform modestly in June. But, developed economies such as Europe and the United States maintain loose monetary policies, and international demand may be more optimistic.
On the supply side: On the one hand, due to the relatively high prices of raw materials such as iron ore, the current steel mills have low efficiency, and under the constraints of environmental protection and “de-capacity”, it is difficult for steel production to expand significantly. On the other hand, June is in the traditional peak season for steel mills, and it is estimated that the country’s daily crude steel output will increase slightly from the previous month.
In terms of inventory: this week’s total steel inventory was 20,325,300 tons, a week-on-week decrease of 81,800 tons. Among them, the steel mill inventory was 6,242,900 tons, an increase of 370,500 tons on a week-on-week basis; the social inventory was 14.0824 million tons, a decrease of 452,300 tons on a week-on-week basis. The destocking of steel stocks slowed down in May, especially the phased accumulation of stocks in steel mills.
On the whole, due to factors such as the rainy season in southern China and speculative speculation, the demand for steel in June may be generally in general, while the supply may show a slight expansion trend, and the supply-demand relationship in the steel market may be relatively balanced. The futures market continues to lead the spot market, and steel prices may fluctuate in June. Beware of the risk of chasing the rise and the fall.