The cost pressure of steel plants is still large in 2021

In 2020, the price of iron ore, scrap steel, and coke was "rising", and the prices of raw and fuel materials remained high. The price of iron ore rose from US$93.2/ton in early January 2020 to US$176.9/ton in December 2020. The prices of coking coal and coke also rose strongly. The price of coke achieved a "ten consecutive increase" in 2020, with a cumulative increase of 450 yuan/ton to 500 yuan/ton, and it is still in the upward path after entering 2021. The price of scrap steel once broke through a new high in the past 7 years.

Just after the Spring Festival, the national steel market continued to heat up, and a new round of rising prices began. The prices of iron ore, steel billets, finished steel products and so on all hit a recent high. Due to the sharp rise in the price of raw materials and fuels, the production costs of steel plants are rising and the benefits of steel enterprises are shrinking. Under the support of rigid cost, steel mills have increased the ex factory price of steel materials to ease the cost pressure.

Steel traders predict that it will be difficult for the prices of raw materials and fuels to fall sharply in 2021. However, some people in the industry believe that in 2021, the supply pattern of iron ore will shift from tight balance to loose, and the price will show a trend of "high in the front and low in the back". In any case, the cost pressure of steel plants in 2021 is still large.