Experts Predit Metal Price Will Increase 2021

- Nov 22, 2020-

 

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Experts predict the metal price increase in China 2021

 

Since November, the domestic steel market shows a rapid pull up the situation, domestic steel prices repeatedly hit new highs.Under the foil of this atmosphere, although domestic steel production enterprises are restricted by environmental protection policy, the effect of production restriction is not significant.

Lange Steel survey data shows that in the first two weeks of November, the blast furnace operation rate of 100 small and medium-sized steel enterprises in China was 86.25%, down 0.2 percentage points from October (86.45%), but still higher than 7.75 percentage points in the same period of last year.In November, steel output will probably soar again, with the daily output of crude steel of the whole country possibly surging to 3 million tons again, among which the average daily output of crude steel of key large and medium-sized steel enterprises will maintain at about 2.16 million tons.

Against the direction of the steel industry in the short term, Lange steel mesh points out, for the domestic steel market, infrastructure investment to maintain a slight rebound trend, the real estate industry also shows strong toughness, and make the industry rebound momentum is also evident in the whole, so that the release of the downstream demand significantly more than expected, but traditional demand off-season is coming step by step, the overall steel demand will gradually turn pale.

Zhongtai Securities research report showed that the recent economic fundamentals are better than the market expectations, while the fund side is tight, superposition overseas vaccines and a series of factors, the market style began to switch.Recently, inventory and transaction data continue to reflect strong demand, which may be related to the delay of this year's mild winter.With the onset of widespread snowfall in the north, future demand will gradually switch to the off-season.Social inventory destocking is expected to slow in late November.There is no obvious correlation between seasonal changes in demand and prices. Previously high social inventories have been digested to a considerable extent before the off-season, and the pressure on inventories has eased. Prices are expected to remain strong in the short term as long as demand does not deteriorate significantly year on year.

Demand continues to grow

China's steel consumption demand will continue to grow in 2021, Chen said.The apparent consumption of crude steel is expected to exceed 1.06 billion tons, an increase of more than 4%.It is estimated that the annual crude steel direct export (steel conversion) of about 80 million tons, the export level from the drop to rise.Together, it is estimated that China's total crude steel demand in 2021 will reach 1.1 billion tons, up by about 5% over the previous year.

In view of the growth of crude steel demand, Lange Steel pointed out that in 2021, the macro economy will generally accelerate, including the domestic market and the international market two levels.

In the domestic market, it is expected that the New Year will continue to strengthen the weak points, infrastructure investment as an important source of steady economic growth, real estate investment will continue to maintain a high growth rate, which will make China's steel domestic consumption continue to be strengthened in 2021.According to the latest statistics of China Construction Machinery Industry Association, in October 2020, the 25 main engine manufacturing enterprises included in the statistics sold a total of 27,331 sets of mining machinery products, with a year-on-year increase of 60.5%.This is the excavator sales data for seven consecutive months year-on-year growth of more than 50%.Excavator sales continue to maintain high growth, indicating that China's infrastructure investment projects intensive construction, infrastructure investment growth further accelerated.This not only indicates that the New Year steel domestic total demand continues to be strengthened, but also means that construction steel in the total demand for a strong position.

In the international market, it is expected that European and American countries may implement massive fiscal stimulus policies in the New Year and will not withdraw from extremely loose monetary policies.While the macro economy is expected to recover, the global manufacturing sector is also showing a positive trend.The positive trends in the global manufacturing industry and the likelihood that European and American countries will implement large-scale fiscal stimulus policies are all good news for the improvement of world steel demand and China's external demand environment, especially in the indirect export of steel.In 2020, China's indirect steel export situation is much better than expected.In the first 10 months of this year, China exported 8.45 trillion yuan of mechanical and electrical products, up 3.8 percent year on year and accounting for 59 percent of the total export value, according to customs statistics.It is expected that European and American countries will continue to be impacted by the epidemic in the New Year. The substitution effect of China's mechanical and electrical products exports will be enhanced, which will stimulate China's mechanical and electrical products exports to speed up, resulting in the indirect export of steel products to be strengthened.

In terms of demand structure, insiders point out that it is expected that China's steel demand structure in 2021 will continue the two characteristics of 2020: domestic demand will be highlighted in the total demand;Domestic demand for construction steel is prominent.

 

In the mean time .Goldman Sachs released its latest research on Thursday, predicting a structural bull market in commodities in 2021. A structural bull market is one in which commodities will rise in general but in different varieties.

Goldman's bullish three macro trends for commodities are:

Bigger stimulus, a weak dollar and the risk of inflation.

 

Customers must note the risk of metal price increasing from start of 2021 , so it is better prepare enough materials and purchase equipment from now .