Under the policy guidance of high-quality industry development and the country's resolute compression of crude steel production, the demand for raw materials such as iron ore in China's steel industry may show significant changes.
Driven by downstream demand, China's steel production reached its highest level in the same period from January to February this year. Among them, the crude steel production was 174.989 million tons, an increase of 12.9% year-on-year. During the same period, China exported 10.14 million tons of steel, a year-on-year increase of 29.9%; Imported steel reached 2.395 million tons, a year-on-year increase of 17.4%. Imported 182 million tons of iron ore, a year-on-year increase of 2.8%; The average import price is 144.5 US dollars per ton, a year-on-year increase of 56.6%. At the same time, 9825 tons of recycled steel raw materials were imported, with an average import price of 487 US dollars per ton.
Although various data have boosted expectations for steel demand, during the 14th Five Year Plan period, steel companies will face dual tasks of ultra-low emissions and carbon reduction, and steel production is expected to peak ahead of schedule under the 'dual constraints' Wang Yingsheng, Deputy Secretary General of China Iron and Steel Industry Association, previously stated at the 15th International Iron Ore Market Seminar.
Zhang Maohan, Deputy General Manager of Ma'anshan Iron and Steel Co., Ltd., also believes that in 2021, the Chinese steel industry will show a development trend of a decline in demand for crude steel, a decrease in steel production, and a decrease in demand for raw materials such as iron ore and scrap steel. With the implementation of policies such as production restrictions, 2020 is likely to become a symbol of China's peak steel production year. The data also provides corresponding evidence. Mysteel Senior Iron Ore Analyst Zhi Hailei pointed out in analyzing the fundamentals of iron ore in the first quarter of this year that after the Spring Festival, downstream demand expectations will drive up raw material prices, and iron ore prices will increase by 2% to 7%. In early March, under the influence of domestic production restrictions, iron ore prices experienced a correction, with a correction of 8.18%. Meanwhile, the year-on-year increase in global iron ore shipments in the first quarter was significant, but the proportion of shipments to China slightly decreased.
Zhi Hailei stated that under the guidance of carbon peak and carbon neutrality goals, the production restrictions of domestic steel mills will become stricter, and production is expected to reach this year's high in May, with a possible year-on-year decrease starting in June. Under the stimulation of high global demand and high prices, the production enthusiasm of foreign steel mills will further increase. In the second quarter, foreign pig iron production may reach 118 million tons, an increase of 2 million tons month on month and about 28.5 million tons year-on-year.
Regarding the issues that the current market needs to pay attention to, Liu Xiaoning, Director of Mysteel's Iron Ore Business Unit and General Manager of Black Industry Research Services, pointed out that the government is controlling the total growth of crude steel, and the implementation of production restriction policies has become the biggest uncertainty in the market. The overseas market's steel production has recovered, ore prices remain high, and the uncertainty of steel mill exports is also increasing.