SMM survey: what kind of metal do you like most in 2022?
On December 15, the Metallurgical Industry Planning and Research Institute released a report predicting that China's crude steel output will be 1.04 billion tons and 1.017 billion tons respectively from 2021 to 2022, down 2.3 percent and 2.2 percent respectively from the same period last year; corresponding pig iron production and iron ore imports will decline. Looking forward to 2022, the strictly prohibited new production capacity will still be the bottom line, and the overall supply and demand of steel will decline steadily.
Corresponding to the demand of the raw material side will decline.
According to the "Forecast results of China's Iron and Steel demand in 2022" released by the Metallurgical Industry Planning and Research Institute, the growth momentum of consumption and investment in China will weaken, the supply chain will be blocked, and the demand for steel in areas such as housing construction will decline in stages in 2021, resulting in a decline in the overall consumption of steel in China. It is estimated that in 2021, China's steel consumption will be 954 million tons, down 4.7% from the same period last year; crude steel production will be 1.04 billion tons, down 2.3% from the same period last year.
The Metallurgical Planning Institute predicts that in 2022, China will continue to implement a proactive fiscal policy and a prudent monetary policy, the situation of sustained economic recovery and development will not change, and infrastructure investment will be carried out moderately in advance to provide effective support for the overall stability of steel demand. The demand for steel in machinery, automobile, shipbuilding and other industries is expected to maintain the growth trend, while the demand for steel in construction, energy, container and other industries is declining.
Under the background of "double carbon", the industry believes that the trend of "double control" will continue. Li Xinchuang, secretary of the party committee and chief engineer of the Metallurgical Industry Planning and Research Institute, said that new production capacity is strictly prohibited as the bottom line, consolidation of the results of capacity removal is still one of the key tasks of the iron and steel industry in the future, and "double control" of capacity and output will become the norm.
Based on this, the Metallurgical Planning Institute predicts that China's steel demand will be 947 million tons in 2022, down 0.7% from the same period last year, and crude steel output will be 1.017 billion tons, down 2.2% from the same period last year.
This means that the corresponding raw material side demand will also decline. The Metallurgical Industry Planning and Research Institute predicts that China's pig iron production will be 824 million tons in 2022, down 4.5% from the same period last year; the consumption of iron ore (finished ore, reduced grade TFe:62%) is 1.302 billion tons, down 4.5% from the same period last year, of which iron ore imports are 1.08 billion tons, down 4.4% from the same period last year.
Profit hub or upstream
According to data released by the National Bureau of Statistics, in November, China's crude steel output was 69.31 million tons, down 22.0 percent from the same period last year; pig iron output was 61.73 million tons, down 16.6 percent from the same period last year; and steel output was 101.03 million tons, down 14.7 percent from the same period last year.
The Ministry of Industry and Information Technology said a few days ago that it has worked out and completed the carbon peak implementation plan for key industries such as iron and steel, non-ferrous metals, petrochemical industry, building materials and other industries, which will be issued one after another in accordance with unified requirements and procedures.
Qu Xiuli, vice president and secretary-general of the China Iron and Steel Association, said a few days ago that demand in the steel industry is relatively stable and weak in 2022, crude steel production lacks the basis for substantial growth, and it is difficult for steel prices to rise significantly again.
The agency believes that in 2021, the demand-led steel industry will be driven differently than in the past, that is, active production restrictions from the supply side. With the decline in the share of real estate and the rise of manufacturing, most traditional industries are gradually shrinking their share of the real estate sector, but because of their large size, real estate still dominates steel. As far as 2022 is concerned, the weak supply and demand situation may make the industry profits fluctuate widely under the pattern of central drive-up.
China Merchants Securities is relatively optimistic, which believes that the gross profit per ton of steel and net profit per ton of steel implied in the main futures contracts are basically near the annual high. With the gradual recovery of steel demand, especially after the resumption of work in the spring of 2022, the profit index per ton of steel is expected to continue to rise, which may exceed market expectations.
