Under the complex trade environment, what is the solution to the booming steel market
In the past few years, tariffs on steel and aluminum products imposed by the Trump administration in the United States have brought steel, a traditional industry, back into the spotlight of global attention. As the raw materials for most industrial products such as mechanical and electrical products, the quantity and price of steel products will inevitably affect the supply and demand relationship in the global market, and have spillover effects on all sectors of the economy and society, including real estate, and their price increases will directly increase Production or service costs by industry.
The World Steel Association's World Steel Statistics 2022 provides a fairly clear picture of the development of the global steel market. The report predicts that world steel demand will increase by 0.4% to 1,840.2 million tons in 2022, and will continue to grow by 2.2% to 1,881.4 million tons in 2023. Crude steel is the primary processed product of steel products. Its production technical difficulty and entry threshold are relatively low, and it can better represent the development level of the global steel industry. Since 2000, the global crude steel production has accelerated significantly. The connectivity of the global market and the reduction of trade barriers have fully released market demand, and steel products have in turn provided strong support for the development of the global economy and society. Except for 2008 and 2015, the global crude steel production has maintained a continuous growth trend since 2000, and the new crown pneumonia epidemic has not changed this trend. In 2021, the world will produce a total of 1.951 billion tons of crude steel, an increase of 72 million tons or 3.8% over the previous year. Compared with the average growth rate of the two five years since 2010, the growth rate of crude steel production in 2021 will be 1.3 and 0.8 percentage points higher, respectively.
There is a strong match between the production and consumption of steel products. From the perspective of country distribution, China will still be the country with the largest crude steel output in the world in 2021, with an output of 1.033 billion tons, a decrease of 31.9 million tons from the previous year; India, Japan and the United States will rank 2nd to 4th, respectively. The output was 118 million tons, 96.3 million tons and 85.8 million tons, an increase of 17.8%, 15.7% and 18.0% respectively over the previous year. In 2021, the 64 countries included in the report will account for 98% of the world's total output, while China's share of these countries' output will be 52.9%, an increase of 7.3 percentage points from 2011. Output in India and other Asian countries except China, Japan and India also increased by 1.3 and 0.7 percentage points, respectively. In comparison, China's market share in global apparent consumption of finished steel (crude steel output + import volume - export volume) in 2021 will be 51.9%, which is also 6.7 percentage points higher than in 2011. It can be found that China's consumption and production are basically balanced, and steel production mainly serves and supports the demand of domestic industries, and has not caused an impact on commodity prices in the global steel market. The market supply and demand relationship in different countries and regions has gradually stabilized, and many large-scale steel production enterprises have also been cultivated and formed.
Among the world's leading companies in crude steel production, China Baowu Group ranks first. Luxembourg-based multinational steel giant ArcelorMittal will produce 79.26 million tons of crude steel in 2021, with Japan Steel Corporation, South Korea's Posco and India's Tata Steel ranking fourth, sixth and fourth respectively. 10.
The iron and steel industry is closely related to the development of international trade, and the distribution of iron ore producers and crude steel producers in the upstream of crude steel is very different. In 2021, the total global iron ore exports will be 1.50 billion tons, of which 1.08 billion tons will be exported to China, accounting for 71.7%. Oceania, South America, Africa, Asia, Russia and North America exported 700 million tons, 270 million tons, 54.6 million tons, 50.5 million tons, 30.6 million tons and 19.2 million tons of iron ore to China respectively. From crude steel down, the variety of global steel products is extremely rich. In 2021, the top five steel products in terms of trade volume are hot-rolled sheets and coils (79.2 million tons), ingots and semi-finished materials (61.2 million tons), galvanized products (45.3 million tons), Cold rolled sheet and coil (36.7 million tons), and pipes and fittings (34.3 million tons). In addition to this, global trade in plate, wire rod, angles and sections, and other clad plates all exceeded 20 million tonnes. China's market share in these steel products will be lower than that of crude steel, while Japan, South Korea, the United States and Europe are more competitive in these fields, and in some special steel products with special requirements, their competitive advantages are even greater. for obvious.
In recent years, although the overall global steel demand has not declined due to factors such as the epidemic, the supply capacity has not been unaffected. Some emerging economies have increased investment in the steel sector, and their production capacity has increased significantly. However, the steel products produced in many countries still mainly meet the needs of the international market, and various factors lead to their actual production capacity may be much lower than the designed production capacity. For example, the Russian-Ukrainian conflict has made Turkey, a new big steel producer in recent years (ranked 7th in the world in 2021), facing the triple challenges of broken raw material import supply chains such as pig iron, rising energy costs, and tariff or quota trade barriers in the United States and Europe, and the upward momentum has been curbed. . On the basis of continuing to promote the existence of global overcapacity in steel products, the United States unilaterally implemented the "232 steel tariffs", while the EU threw out steel tariff quotas, and the degree of trade protectionism in the steel industry was very serious. The supply and demand relationship in the international steel product market has been severely disrupted, and the Turkish steel product export market has been greatly affected.
The "Belt and Road" initiative regards the interconnection of infrastructure as an important cooperation dimension, which has attracted the interest of many countries. Biden has made infrastructure revitalization an important feature of his economic policy, and he is also pulling his so-called allies and partners to expand investment in infrastructure. Whether it is the physical connection of infrastructure, or the communication or data control system attached to the physical foundation, it is inseparable from the extensive use of steel products in its entire life cycle. The quality and characteristics of materials directly determine whether the interconnection is reliable or not. . Guaranteeing stable steel production is not only related to the so-called national security of the United States, but also has a significant impact on the industrialization and urbanization process of the "Belt and Road" countries including China. In the complex supply chain relationship, it is necessary to ensure the basic balance of supply and demand, not only the total amount, but also the mutual matching in time and space.
Of course, technological innovation is particularly important for the steel industry. Due to the large energy consumption and environmental impact, the development of the steel industry needs to be constrained by perfect supervision and standards. There is broad consensus and demand to reduce the environmental impact of the steel industry at a more reasonable cost when the world is coordinating to adjust to climate change. The efficient use of renewable iron resources is also an important option for reducing environmental impact. Lowering the cost of steel products will help reduce inflationary pressures and create better conditions for a global recovery in a complex environment.