MB: Intl Ferro-alloys Intl Ferro-alloys: Stimulus efforts, green policies said key to growth
Nov 12, 2020 | 12:49 PM | London | Jon Stibbs
......Fastmarkets’ research team has raised its expectations for rebar and finished steel consumption growth year on year in 2020, Ritzema said. But the traditional infrastructure investment seen in the third quarter has slowed due to insufficient funds and shortage of good projects.
Traditional infrastructure spending - rather than on new infrastructure - will still be the main force to boost steel demand in the short term, delegates learned on November 9.
“The amount of government stimulus going into countries around the world - obviously we are most familiar with what is going on in China and from my personal perspective I’ve mostly been involved in the US - but to see these unified efforts globally to stimulate economies has really been impressive,” Amy Bennett, principal consultant at Fastmarkets, said. “And I think this will certainly affect the steel industry and in turn ferro-alloys as we go into 2021 and possible even 2022.”
“The stimulus issue is really key to growth next year,” she said.
Bennett anticipates rebar demand in China to grow by 5-10% on a year-on-year basis in 2020, despite expectations that lower consumption of rebar from the construction sector in the winter would slow the recovery in steel production.
“Although there are often these environmental announcements, usually output does not fall as much as projected [in China in the winter]. So while we see reduced rebar consumption that does not mean we will see reduced production. We may see falling rebar prices as demand falls and production continues to rise but ultimately in terms of demand for ferro-alloys, including manganese alloys, vanadium etc, we definitely see demand will continue into the fourth quarter,” Bennett said.
Bennett agreed with Paolo Misk of Largo Resources, who spoke on November 9, that Chinese steel production has been sufficient to cushion at least the global vanadium market from weaker demand in Europe and the United States in the fall-out from the pandemic.
“That’s a theme we’ve seen not just with vanadium but across the markets this year. Thanks to China these markets have remained remarkably stable in these unprecedented times,” she said. “Thus far this year, Chinese steel production is up around 5% and this has offset the decline in rest of world steel of about 14%.”
For 2020 as a whole, Fastmarkets forecasts Chinese steel production to rise by about 5% against last year, whereas global steel output will be down around 3%, she said. Fastmarkets analysts expect Chinese steel production to grow by 3 or 4% next year, while there will be strong steel production in the US and to some extent in Europe as well. This indicates the steel market will not be so reliant on China to prop up demand.