After entering the peak demand season, domestic steel consumption continues to increase.
According to statistical data, the apparent consumption of crude steel in China from January to August this year was about 663.24 million tons (excluding imported billets and rough forgings, the same below), an increase of 6.1% over the same period last year, and an increase of 1.1 percentage points compared with January July. Among them, the apparent consumption of crude steel in August reached 94.21 million tons, with a year-on-year increase of 13.4%.
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In August, the apparent consumption of crude steel in China increased significantly, mainly due to the following reasons: first, domestic output reached a new high. According to statistics, in August 2020, China's crude steel output reached 94.85 million tons, an increase of 8.4% year-on-year. Second, imports are more rapid. According to the statistics of the General Administration of customs, China imported 2.24 million tons of steel in August, up 129.9% year on year. Finally, exports fell further, and a large amount of steel was turned to domestic consumption. In August, China exported 3.678 million tons of steel, a year-on-year decrease of 55.3%, and the decline rate was further expanded, and more steel products were turned to domestic consumption.
It is worth noting that China's export trade also exceeded expectations in August. According to the statistics of the General Administration of customs, in the first eight months of this year, in terms of RMB, China's exports increased by 0.8% over the same period of the same period last year, realizing a downward to an upward trend. Among them, exports increased by 11.6% in August, continuing its high growth momentum, significantly exceeding expectations. Under this background, although China's direct steel exports decreased by 18.6% in the first eight months of 2020, the indirect exports, mainly mechanical and electrical products, accounted for more proportion, showed a relatively large growth trend. According to the statistics of the General Administration of customs, from January to August this year, the export volume of China's mechanical and electrical products increased by 2.1% year-on-year, accounting for 58.5% of the total export value. Among them, the export volume of mechanical and electrical products in August increased by 13.9% year-on-year; among mechanical and electrical products, the export of excavators increased by 25.7% year-on-year. It can be seen that China's overall steel export (direct export and indirect export) is still good this year, showing great toughness and becoming an important support for China's steel export and steel consumption.
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Moreover, China's purchasing managers index, excavators and other leading indicators continued to improve, while market participants such as steel enterprises and traders continued to maintain an optimistic or cautious optimistic atmosphere. At the same time, the US Federal Reserve and major western countries have implemented extremely loose monetary policies, and a large amount of funds have entered China through various channels, which has also helped to create a relatively comfortable capital supply environment for the steel market.
It is the above factors that jointly promote the domestic steel consumption in China. Looking forward to the future of China's steel market, as the macro indicators continue to improve, it is expected that the steel consumption situation is still good. Due to the existence of this ballast, even if the steel production continuously reaches a new high, it will not lead to a large increase in the overall steel inventory (social inventory and steel enterprise inventory), and there will be no serious oversupply. Therefore, the market price is difficult to fall sharply. (from: original article by Langer expert Chen Kexin)