Futures trading price list of some metals on the Shanghai Exchange (Unit: yuan/ton). Summary: Thao Vy

Steel demand is mainly from the construction and manufacturing sectors. Fitch Ratings expects total fixed asset investment (FAI) in infrastructure to increase significantly by 2022, in an attempt to offset the slump in the residential construction market.

Iron ore chart at Shanghai exchange (Source: Shfe)

At the same time, they also expect FAI in the manufacturing sector to grow at a single-digit average rate as demand recovers from the auto industry, which is suffering industry-wide decline due to chip shortages.

As a result, Fitch Ratings estimates apparent steel consumption (measured as total production minus net exports) in 2022 will fall slightly to less than 1 billion tons, compared with the forecast for 2021 of 1 billion tons, with total output still over 1 billion tons.

According to Fitch Ratings, supply will be tight with the expectation of cutting production by about 30 million tons in the first quarter of 2022 from controlling production during the winter heating period.

Additionally, air control measures for the Beijing Winter Olympics could cause further output declines.

Fitch Ratings also expects consolidation to be accelerated, as strict environmental regulations and dual carbon targets will mean increased costs for smaller producers due to production disruptions. regularly.