Iron ore industry Research Report: Lonely at the top

We predict that the output of overseas long-process pig iron in 2022 will be 4.8, 5.0 and 520 million tons, respectively. For 2022, we still use the assumptions of 2021:

(1) We assume 2011 levels in the cautious case, 2014 levels in the optimistic case, and 2011-2019 averages in the neutral case.

(2) Considering factors such as the time point of production and capacity climb, it is assumed that the capacity utilization rate of the overseas new growth process capacity in 2021 is 80% and that of the overseas new growth process capacity in 2022 is 50%.

Therefore, assuming that the capacity utilization rate of overseas long-process pig iron in 2022 is 95.8, 100.3 and 104.6 (based on 2010 =100), we predict that the output of overseas long-process pig iron in 2022 will be 4.6, 4.8 and 5.0 million tons, respectively. Considering that the new overseas production increase in 2022 is expected to contribute 0.15 million tons of production, the annual overseas long-process pig iron production in 2022 will be 4.8, 5.0 and 520 million tons, respectively.

2.2 Domestic long process demand: It is expected that the domestic long process pig iron production in 21 years will decline by 2.3% year-on-year

In 2020, China's long-process pig iron production accounted for 68.2% of the global long-process pig iron production. According to the statistics of the International Iron and Steel Association, the global long-process pig iron production in 2020 is 1.295 billion tons, an increase of 1.0%, of which China's long-process pig iron production reached 884 million tons, an increase of 9.2%, and the output accounted for 68.2% of the global long-process pig iron production.

The National Development and Reform Commission issued a document that will ensure a year-on-year decline in crude steel production in 2021. According to the news of the National Development and Reform Commission on April 1, 2021, the reduction of crude steel production in 2021 will take into account factors such as the "six stability" work, the implementation of the "six guarantees" task, the carbon peak carbon neutral long-term goal node requirements and the smooth operation of the steel industry on the basis of consolidating and improving the results of steel capacity reduction. While maintaining the continuity and stability of the supply-side structural reform policy in the steel industry, it adheres to the principles of marketization and rule of law, distinguishes the situation, categorizes guidance, and focuses on reducing the crude steel production of enterprises with poor environmental performance, high energy consumption, and relatively backward process and equipment levels, avoiding "one size fits all" and ensuring that the national crude steel production will decline year-on-year in 2021.

Tangshan environmental protection limited production upgrade, "carbon peak" policy has achieved initial results. On March 18, 2021, the Office of the Tangshan Air Pollution Prevention and Control Leading Group issued the Notice on Submitting Measures to Limit Production and Reduce Emission of Steel Industry Enterprises, requiring all steel enterprises in Tangshan except Qian 'an Steel Company of Shougang Co., LTD and Shougang Jingtang Iron and Steel Joint Limited Liability Company. From 0:00 on March 20 to 24:00 on December 31, the production limit will be implemented, and the emission reduction ratio will be 30%-50%. According to Mysteel statistics, in the 13th week of 2021, the utilization rate of blast furnace ironmaking capacity of 247 iron and steel enterprises in the country was 88.3%, which was 3.2PCT lower than the average capacity utilization rate in January and February.

We expect global production growth to be 3.3% in 2021, with production increases mainly coming from Brazil and Australia. According to our statistics, there are 33 iron ore companies in 11 countries and regions in the world, and the 2020 iron ore production and 2021 iron ore production forecast of 105 mines with a global market share of 71.36%, it can be seen that Australia and Brazil are still the main sources of production increase. Production increase in 2021 can reach 27.4 million tons, 37.9 million tons, in addition to the four major iron mines such as Roy hill, Hope Downs production in 2021 can reach 60 million tons, 47 million tons. In India, production in 2021 increased by 5.56 million tonnes compared to 2020. Other countries, such as the United Kingdom and Russia, are mainly recovering from pre-epidemic levels.

We expect global production to grow by 3.2% in 2022, with additional production coming from Vale and FMG. According to the above statistics for the new projects of the four major mines, Vale will increase production by 70 million tons in 2022, and FMG's Iron Bridge project will increase production by 11 million tons.

4. Comprehensive supply and demand: tight balance of supply and demand in 21 years, weak supply and demand in 22 years, and mine prices are expected to fall at a high level

According to the previous analysis, the growth rate of global iron ore production in 2021 May be 3.3%, the growth rate of demand may reach 4.2%, and the global iron ore market may be in a tight balance. According to the above forecast for iron ore demand and supply, we expect that the growth rate of global iron ore production in 2021 will be 3.3%, and the growth rate of demand is expected to reach 4.2%, so it is judged that the global iron ore market in 2021 May be in a tight balance. As of May 10, 2021, the MyIpic iron ore composite price Index reached 212.6 US dollars/ton, a significant increase of 86.4% from the 2020 global average price of 114.1 US dollars/ton.