In the first quarter of 2021, global steel production output amounted to 663 Mmt, up 14%. In comparison to first quarter of 2020. More than half of this was produced in China, where production increased for 16%. In the EU itself, production increased to 51 Mmt, coming to 12% more than in same period of 2020.
It is estimated that the global demand for steel will increase by 5.8% throughout 2021, to 1.87 billion tonnes. In 2022, demand is expected to jump up by 2.7%, to 1.92 billion tons. However, steel consumption in the EU throughout 2021 may increase by 13%, to 152 Mmt (still less than in the pre-pandemic year of 2019), when consumption reached 154 Mmt. In 2022, the demand might increase by approx. 3% and should come to 157 Mmt.
The scale of the rebound in the steel market in 2021, which followed the pandemic crisis, surprised global markets. Mills and distributors in the first half of 2021 recorded spectacular increases in financial results. The second half of the year should also be favourable.
What drives the results of the steel industry is the increase in prices of steel products to record levels. The demand for steel from various sectors of the economies, which started to rebuild their production capacities after the pandemic, turned out to be so high that the mills could not keep up with the production. Hence the sharp price increases to the highest levels in the last years.
Additionally, the rising costs of CO2 emissions broke records. The increase in the prices of emission allowances translates into the prices of electricity, construction materials and metallurgical products. In case of the steel industry, energy is the second cost after the raw materials.
In Europe the green transformation is burdening the steel industry with additional costs that are not borne by competitors from other regions of the world. The European market is aiming to introduce a carbon tax on imported goods from 2023. Currently, a number of anti-dumping taxes and quantitative quotas are put in place for steel importation.
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