China's steel and iron ore markets have experienced
significant fluctuations in the past couple of years due to various factors at
home and abroad, and the markets are expected to continue fluctuating,
according to Alice Shen, deputy general manager of Shagang International
(Singapore) PTE. LTD. She made these remarks during the Singapore International
Ferrous Week 2023, which commenced on May 23 and will run until May 26.
"As major commodities, steel and iron ore can be
greatly influenced by the international environment. Currently, China is still
in the recovery phase after COVID-19, so the market has been heavily impacted
by geopolitics, high inflationary pressure in the EU and U.S., and concerns
arising from the banking crisis in some countries. All these factors have
resulted in increased market uncertainties and risk aversion attitudes,"
Shen pointed out.
In this context, China's steel industry has incurred
extensive losses. Despite the introduction of many stimulus policies to support
market improvement, significant uncertainties still persist.
"Nevertheless, we firmly believe that the economic recovery and
development are sustainable, though this process may take a considerable amount
of time," Shen said.
With China's steady economic recovery and
development, Shen believes that demand for steel is expected to remain at a
good level in the short term. However, in the mid- to long-term, as China's
urban construction reaches a certain level of development, demand for steel is
expected to decline.
Moreover, policies implemented by the Chinese
government in recent years also indicate a tendency to reduce the country's
crude steel production. These factors, coupled with the increasing investment
in electric arc furnaces domestically, there is a possibility of a gradual
weakening in China's iron ore demand, noted Shen.
As the Chinese steel industry faced tremendous
difficulties and suffered substantial losses during the past year, domestic
steel companies were prompted to increasingly focus on cost management, Shen
added.
"There has been a shift in the mindset of steel
producers from high productivity and high efficiency to cost management and
profit preservation. This shift is an inevitable choice (for Chinese
steelmakers) to adapt to market development. Consequently, the usage of
low-grade and non-mainstream iron ore resources has noticeably increased,"
Shen said.
However, against the backdrop of China's dual carbon
goals (achieving peak emissions before 2030 and carbon neutrality by 2060),
reducing emissions remains a key consideration for the future of Chinese steel
enterprises. From this perspective, Shen thinks that demand for medium- and
high-grade iron ore is expected to remain at a good level.
"Additionally, we are witnessing the gradual
promotion and application of new smelting technologies like hydrogen
metallurgy. These new technologies will undoubtedly play a positive role in the
decarbonization and development of China's steel industry," Shen
concluded.
Steel mint