How To Ensure The Resources Of The Steel Industry Under The Background Of Dual Carbon

Under the background of "dual carbon", how does the steel raw material industry build a high-quality industrial chain supply chain, how to ensure supply and price stability, and how to scientifically plan for development? At the 2021 (10th) China Steel Raw Materials Market High-end Forum hosted by the Metallurgical Industry Planning and Research Institute recently with the theme of “Double Carbon Goals Leading and Ensuring Resource Security”, participating experts conducted in-depth exchanges on these issues.

Many factors affect the price of iron ore fluctuates at a high level

Niu Li, deputy director of the Economic Forecast Department of the State Information Center, said that the current global economic recovery and development is facing many uncertainties due to the public health crisis, energy crisis, climate crisis and food crisis. Since 2021, the prices of bulk commodities worldwide have risen rapidly, which has also driven the prices of raw materials, including iron ore and non-ferrous metals, to soar. To a certain extent, this has had a considerable impact on the healthy development of the economy. As a result, it has once again emphasized the foundation and importance of resources to the economy.

Jiang Shengcai, secretary general of the China Association of Metallurgical and Mining Enterprises, said that with the recovery of the global economy, the rapid recovery of the manufacturing industry and the acceleration of construction production have driven the rapid growth of global steel demand. The growth rate of overseas steel production is higher than that of domestic production. From January to September, the global cumulative crude steel output was 1.46 billion tons, a year-on-year increase of 7.8%, which has exceeded the level before the epidemic. From January to September, the world’s top 20 iron ore companies produced 1.167 billion tons of iron ore, a year-on-year increase of 3.3%. As far as the domestic situation is concerned, the iron ore market is basically in a state of balance between supply and demand.

However, due to factors such as the epidemic situation, weather and port berths, uncertainty still exists on the international iron ore supply side. In the first half of the year, the market demand for iron ore increased at a high level, which supported a substantial increase in its price. In mid-May, the Platts 62% iron ore price index rose to US$233.1/ton. With the increase in global mine shipments, the decline in steel demand, and the adjustment of export policies, the price of iron ore once fell to US$89.5/ton on November 10.

Jiang Shengcai analyzed that the ups and downs of iron ore prices have greatly damaged the healthy development of domestic mining enterprises, and seriously affected the development confidence and confidence of market entities. Mining companies must be prepared for danger in times of peace, speed up to make up for shortcomings, work hard, reduce costs and increase efficiency, and enhance risk resistance; improve corporate asset structure, enhance corporate profitability, and accelerate digital transformation. At the same time, strengthen fiscal and taxation and industrial policy research to contribute to the overall healthy development of the industry.

Yao Lei, a senior engineer at the Mining Market Research Institute of the International Mining Research Center of the China Geological Survey, said that from the current point of view, the global iron ore distribution varies greatly between the northern and southern hemispheres, and the supply and demand pattern is difficult to change in the short term. Under the epidemic, the global average steel scrap price and iron ore price generally showed a "√"-shaped trend and then declined; iron ore giants still have an oligopoly on the global iron ore industry chain. However, favorable factors are also increasing, such as the gradual increase in iron ore and steel smelting capacity in overseas industrial parks, such as the first use of RMB for cross-border settlement by the world’s three major iron ore suppliers.

Build a safe, green and efficient resource guarantee system

At present, the basic national conditions of my country's mineral resources and their status and role in the overall situation of national development have not changed, and the trend of tightening resource and environmental constraints has not changed. Under the current international situation, economic and social development background and climatic conditions, it is particularly important to strengthen the safety guarantee of important minerals, promote the coordination of resource development and ecological protection, and build a safe, green and efficient resource guarantee system.

Luo Tiejun, vice chairman of the China Iron and Steel Association, said that to develop into a strong steel country, one must first become a resource-rich country. It is necessary to accelerate the development of iron ore resources, improve the ability to guarantee resources, and vigorously support the expansion and strengthening of the industrial chain of recycled steel material recovery and recycling. It is necessary to strictly limit the construction of high-energy-consumption and high-emission projects, form a reasonable competitive environment of “survival of the fittest, and good money to drive out the bad”, and promote strict control of total production capacity and optimization of industrial structure through carbon emissions, energy consumption indicators, and ultra-low emissions. Green, low-carbon and high-quality development of the industry. At the same time, it is necessary to establish an effective market-oriented industry self-discipline mechanism, effectively maintain market order, and form a new mechanism that not only has energy consumption and carbon emission policy constraints, but also has industry self-discipline and government supervision to effectively comply with market laws and market requirements.

The replacement of iron ore by scrap steel is still on the rise

At the forum, Li Xinchuang, Secretary of the Party Committee and Chief Engineer of the Metallurgical Industry Planning and Research Institute, said that at present, the supply and consumption of scrap steel resources in my country are generally on the rise. In 2020, the total amount of scrap steel resources in my country is about 260 million tons, and it is expected to reach more than 340 million tons in 2025. In 2020, national steel scrap consumption reached 230 million tons, an increase of 6.5% year-on-year. According to incomplete statistics, from January to September 2021, my country's total steel scrap consumption is about 200 million tons, an increase of 31.2% year-on-year, and it is still rising.

Li Xinchuang believes that with the further development of my country's steel industry and the gradual improvement of supporting conditions such as scrap steel resources and electricity, the adjustment of the process flow structure is an inevitable trend. To a certain extent, low-carbon development will speed up the adjustment of process structure and accelerate the increase in the proportion of electric furnace steel. It is estimated that by 2025, the proportion of my country's electric furnace steel output in the total crude steel output will increase to 15%-20%, and the proportion of scrap steel will reach 30%.

Analyzing the reasons for the rapid increase in the supply of scrap steel resources, Li Xinchuang said that after the country’s 140 million tons of “land strip steel” production capacity was completely banned in 2017, the supply of scrap steel resources in my country has seen a statistically significant increase. From 2018 to 2020, with the continuous accumulation of my country's steel reserves, the supply of scrap steel has increased steadily, with an annual increase of about 20 million tons. It is estimated that in the next 5-15 years, my country's scrap steel resource output will gradually enter the fast lane. Scrap steel resources will increasingly become an important supplement to iron ore resources, and the share of scrap steel replacing iron ore will generally show an increasing trend.