Head of Materials Division of the World Steel Association: Global steel raw material demand structure will usher in a major adjustment Steel Easy Network

Release time：Apr 22, 2019 From：admin

Recently, Barry Bekier Chiftech, head of the World Steel Association's raw materials department, discussed the fluctuations in the global iron ore market, the challenges that the world's steel raw materials will face in the future, and the structural changes in the global steel industry's production process in recent years. The topic of China's steel industry in the supply of raw materials and other topics accepted an interview with the reporter of China Metallurgical News. He believes that the obvious fluctuations in commodity prices can often reflect the temporary shortage or surplus of the market. The global steel industry is increasing investment in innovation and breakthrough technology research and development, and will be environmentally friendly and steel raw materials for steel products. Demand structure optimization has a major impact.

Reporter: Since 2019, the price fluctuation of iron ore has increased significantly, and the market uncertainty has increased. Do you think this reflects the changes in the supply and demand of the iron ore market?

Chiftech: The fluctuation of iron ore prices since 2019 is mainly affected by the production situation of mining enterprises and weather changes. Vale is located in a tailings dam in Brumadinho, Minas Gerais, Brazil. The Australian mine was hit by the hurricane Veronica and became a short-term supply of iron ore. Two major external factors. In recent years, Brazil and Australia accounted for more than 75% of global iron ore exports. Therefore, the disruption of the iron ore supply chain in these countries will have a serious impact on the global steel industry and cause considerable fluctuations in the iron ore market.

Supply-side structural reforms and pollution control actions that China is vigorously promoting are also an important driver of changes in iron ore and other steel raw material markets.

The Chinese government's adjustment of the economy has changed China's demand for iron ore to a considerable extent. For example, as China introduces stricter pollutant discharge standards (in combination with favorable market demand conditions), China's demand for high-quality iron ore is gradually increasing. At the same time, iron ore suppliers have responded quickly to this change, gradually shifting to higher quality products in product layout.

Most of the important changes in global iron ore supply over the past 20 years have been driven by changes in China. Since 2000, with the strong growth of China's steel output, China's demand for seaborne iron ore and metallurgical coal has also increased significantly, which has promoted the continuous growth of iron ore prices and formed the “iron” from 2000 to 2014. The ore super cycle phase. After 2014, China's steel output growth slowed down. At the same time, the global iron ore supply market has undergone a series of restructuring with a relatively fast response rate. Some smaller iron ore suppliers have withdrawn from the market, some large irons. The status of ore suppliers in the market has been further consolidated and gradually formed today's situation.

Reporter: What challenges do you think the world's steel raw materials supply will face in the short-term (1 year) and medium-term (3 years or more)?

Chiftech: In the short term, the recent dam failure in the Vale may exacerbate the tight supply of high quality iron ore already on the market. In addition, the recent strong demand growth of Indian marine metallurgical coal and the current situation of Chinese steel mills moving from inland to coastal areas may lead to increased demand for marine metallurgical coal, especially high quality hard coking coal, PCI coal (injected coal) and The supply of anthracite will tend to be tight. Therefore, we should pay attention to the long-term sustainable supply of metallurgical coal and increase investment in metallurgical coal mining.

In the long run, the world steel raw materials market will face challenges such as supply chain disruption, changes in steel production methods in developing countries, and changes in the demand structure of steel raw materials.

First, the risk of damage to the steel raw material supply chain is very high. Global iron ore exports increased from 500 million tons in 2000 to 1.5 billion tons in 2016, while global metallurgical coal exports increased from approximately 180 million tons to 310 million tons. During this period, Australia gradually strengthened and consolidated its position as a major supplier of steel raw materials. The export volume of iron ore increased from 150 million tons to 800 million tons, and the export volume of metallurgical coal increased from 100 million tons to 200 million tons. In the future, the supply of Australian steel raw materials will further increase, but the growth rate will slow down. Therefore, we should make the necessary infrastructure investments to mitigate the impact of supply chain disruptions.

Second, the increasing supply of scrap may change the future of the global steel industry. It is estimated that in 2018, about 780 million tons of iron-containing waste were produced worldwide, of which 700 million tons were recovered by the steel and foundry industries. It is estimated that by 2030, the world's iron-containing waste will reach about 1 billion tons, and by 2050 it will reach 1.4 billion tons. The utilization rate of scrap in developing countries (especially China) is expected to show strong growth. It is estimated that by 2030, China's scrap supply will reach 330 million tons, and by 2050 it will reach 450 million tons.

At present, China's market share in EAF steelmaking is relatively low, and the amount of scrap used in EAF steelmaking and converter steelmaking is less than in developed countries and regions. However, with the withdrawal of 140 million tons of “strand steel” capacity and the implementation of new environmental protection measures, China's steel production methods will undergo important changes, and a number of new electric arc furnace plants are expected to be put into use within the next five years.

Finally, the global steel industry is increasing its investment in innovation and breakthrough technology research and development, which will have a major impact on the environmental performance of steel products and the optimization of the demand structure of steel materials.

Reporter: From a global perspective, what structural changes have occurred in the steel industry in the past three years?

Chiftech: The most significant change in the global steel industry in recent years has been the supply-side structural reform of the Chinese steel industry. From 2016 to 2018, China eliminated about 150 million tons of excess steel capacity. It is estimated that from 2018 to 2023, the new capacity of China Electric Arc Furnace (EAF) will exceed 50 million tons / year, which may increase the proportion of EAF steelmaking in China's total crude steel production. At the same time, China is moving steel mills out of the city. It is estimated that about 25 million tons/year of steel production capacity has been moved out of the city, and plans to move more capacity out of the city in the next five years. During the post-relocation redeployment phase, some BF-BOF (blast-converter) capacity has been or will soon be replaced by EAF capacity. The relocation of China's steel industry and the replacement of production capacity will lead to major changes in the steel industry pattern and help solve the pollution problems in some cities.

In addition, the continued strong growth in steel production capacity in India and the ASEAN region is also a major change. With the change of ownership of large non-performing assets (as determined by the Bank of India), there has been some consolidation in the Indian steel industry. If the merger of Tata and ThyssenKrupp is finally approved by the European Commission, it may play a positive role in promoting the integration of the European steel industry.

Reporter: What is the biggest problem in China's steel industry currently in the supply of raw materials?

Chiftech: China's scrap supply is expected to continue to maintain strong growth in the coming decades. It is foreseeable that the development of modern recycling technologies will play an important role in the steel raw material supply chain. China also needs to further improve the equipment and technical level of scrap recycling and strengthen its processing capacity.

In addition, Chinese steel companies are currently facing the world's most stringent pollutant emission requirements, namely ultra-low emission standards. In order to achieve ultra-low emissions, Chinese steel companies need to ensure a stable and continuous supply of high-quality raw materials. Given the high risk of current global steel material supply disruptions, this is a considerable challenge.