Steel production and logistics costs will remain high. Does the 2022 stainless-steel market face great pressure? In 2021, the global energy supply of oil, natural gas, refined oil, coal and electricity was tight, the inventory was low, and the prices generally rose sharply, with an average year-on-year increase of more than 30%. The prices of some energy products doubled or several times. Due to the strong “cyclical behavior”, it is expected that the global “energy shortage” will not be completely lifted in 2022, and product prices will rise further.
stainless-steel market 2022
The increase in logistics costs comes first from the sharp rise in the price of refined oil, resulting in a significant increase in all transportation costs from sea to land; Secondly, the transportation capacity gap, especially the tension between supply and demand of marine transportation, also leads to the increase of logistics costs. It is understood that since 2021, the global dry bulk shipping price index (BDI) has been rising all the way, breaking through 5600 points in October, up three times from about 1400 points at the beginning of this year, reaching a new high in 13 years. It is expected that the shipping cost will remain high in 2022, even with new growth.
In terms of the cost of smelting raw materials, the relatively large increase in the price level of energy such as electricity, oil and gas will push the production cost of smelting raw materials such as high-speed iron ore and coke. Not only that, the early COVID-19 outbreak triggered an economic recession, leading to a downturn in the overall mining investment, which has seriously inhibited the current and future mining output. In addition, environmental protection restrictions will also affect the rapid increase in the output of energy products. It is estimated that the supply of coking coal, coke and scrap steel may be tight in 2022, which will help raise prices and push up the smelting cost of steel.
At the same time, the stainless-steel market demand situation has improved, and the overall increment is limited. From January 1, 2021, the new financing regulations of “three red lines” will be fully implemented in the real estate industry. The implementation of new financing regulations has had a significant impact on the investment of real estate enterprises. According to the data of the China Bureau of statistics, from January to November 2021, China’s real estate development investment was 13731.4 billion yuan, with a year-on-year increase of 6.0%. Compared with the growth rate from January to February at the beginning of the year, it fell by 32.3 percentage points, showing a cliff like decline, and the growth rate of real estate investment in the whole year was in a rapid downward trend. The sharp slowdown in the growth rate of real estate investment has directly affected the demand for steel. Even in the peak construction season of “golden nine and silver ten” in the second half of the year, the demand for steel has not been greatly driven.
Overall, under the influence of multiple factors, it is expected that the strength of stainless-steel market price in 2022 still face great pressure.
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