1. Micro-environment
The global economy is still going slowly and the domestic economy is still under pressure. The fiscal policy will be considered as a priority to the monetary policy. The US-China negotiation has got an over-expected effect and the bilateral relations still have a great possibility to be improved.
2. Downstream demand
The real-estate policy of 2019 will be moderate than that of 2019. The infrastructure investment will play a key role for stable growth while the investment speed will be hard to be improved dramatically. The manufacturing industry like machining, home appliances, and ship-building will see stable growth while the automatic production and sales will have a slight decline. The steel export of 2020 will have a rebound and the export volume will have a 5% increase in 2020.
3. Steel supply
At present, there is an equilibrium between the steel supply and demand, and the steel price is still relatively stable, while the issues like illegal capacity replacement and capacity expansion still exist.
The policy of environmental protection and production restriction will still have some stage effect while the production restriction will not be tighter this year. The expected steel capacity growth will be 3%.
4. Raw material
The foreign iron ore supply is expected to have an increase of 55 million tons in 2020 and the scrap output has an increase of 230-240million tons. The price of coke will be up to the steel market.
The steel market will have an expected “W” trend in 2020: steel prices will decline, go up, then drop again and finally have an increase. The lowest point of the price will occur in the first quarter and the highest point will be at the beginning of the third quarter.