MethodologyContact usLogin
Steelmakers, miners and traders will continue to grapple with fluctuating prices and overcapacity while adapting to shifting trade patterns. Read more about what’s ahead in 2024 for Asia’s green steel market below.
In 2023, a surge in export volumes offset weakness in domestic demand and helped bolster steel prices, but market participants unanimously expressed concerns that exports would not maintain such strength in the coming year.
Customs data shows that China’s finished steel exports surged 35.6% year on year in January-November 2023. A raft of unique factors, including a weakened yuan against a stronger US dollar and the powerful Turkey earthquake contributed to the sharp increase in China’s steel exports this year.
But dollar/yuan exchange rates are unlikely to remain favorable to China’s exports next year after the US Federal Reserve paused interest rate hikes, traders told Fastmarkets.
Overall domestic coking coal capacity is stable, while the newly added capacity will not be adding supply notably. Meanwhile, coal mine safety investigations are expected to continue, which will maintain the tight supply of domestic coking coal in the Chinese market.
Safety inspections of coal mines will still be strict in 2024, which will tighten the domestic coking coal supply during the year, according to an international trader in Northern China.
Meanwhile, several sources reported that the production hub of domestic coking coal Shanxi province is facing resource depletion.
Meanwhile, in Asia ex-China, market participants are wary of a possible coke surplus. New metallurgical coke capacity that is projected to be built and commissioned in Indonesia will reach 18.8 million tonnes per year in 2024, Fastmarkets data shows.
The fast coke capacity expansion has triggered wide market concerns over a surplus coke supply, especially in 2024.
“By the end of 2023, there might still be coke supply gap in Indonesia, but next year, with more capacity coming online, a supply surplus is expected,” one Shanghai-based analyst said.
A source from one of the Indonesia cokeries told Fastmarkets that “most part of the coke produced is destined for export. If all capacity is commissioned, there might be around 16-17 million tonnes available for export, whereas global total coke trade volumes are just at around 25 million tonnes.”
“China’s coke trade volumes are expected to reduce from 7.91 million tonnes in 2022 to 5.80 million tonnes in 2023 and 4 million tonnes in 2024,” a Chinese coke analyst said.
Coking coal end users in India and Indonesia are going to further diversify their coal sources and reduce their reliance on Australian coking coal to control production costs.
Major Indian steelmakers such as Tata Steel, Jindal Steel & Power and Vedanta Group have all been testing premium hard coking coal from the US including Blue Creek No.7 and Oak Grove. These brands will be officially applied in their coal blending in 2024 if the test results prove applicable, according to market sources.
Indonesia cokeries also started to source premium hard coking coal from China and the US in 2023 and some cokeries are looking to further diversify coal blending by using probably less Australian premium hard coking coal but more hard coking coal or semi-hard from sources including the US, Mozambique and Russia.
Asia’s move to transform the steel industry into a low-carbon one is picking up pace, and may even accelerate as steelmakers find ways to export to Europe, especially after the Carbon Border Adjustment Mechanism entered its transitional phase in mid-2023.
Market participants in Asia said that the need to export, coupled with the prospect of an oversupply of steel in Asia in 2024, may be the push steelmakers need to increase their supply of low-carbon steel.
Sources said the burgeoning steel capacity in Southeast Asia has drawn concerns among market participants, especially amid the slowdown of demand in the region.
China’s National Development and Reform Commission (NDRC) set a pilot target for peak carbon emissions in 100 cities and industry parks for the first time in December 2023.
Steel production hubs such as northern China’s Tangshan are on the list of 100 pilot cities.
These 100 cities and industry parks will promote green steel production, including financial support from local governments, market participants said.
Market sources in China expect demand for green steel to increase in the coming years, even as these cities aim to achieve peak carbon emissions, which will in turn encourage steel mills to invest more into green steelmaking technologies.
Market participants do not expect demand for ferro-silicon to grow significantly next year due to the continued sluggish real estate industry.
A ferro-silicon producer source said: “A downturn in real estate investment weighed on steel production and I assume steel production will not recover in 2024, either.”
But market watchers expect the green steel revolution to have a positive cost impact on upstream ferro-silicon producers. The price of ferro-silicon largely depends on changes to the cost of electricity, according to multiple sources.
A China-based ferro-silicon trader source said: “As we are advocating the green steel approach, more and more ferro-silicon producers will shift to wind power sources, which will lower the production costs of ferro-silicon.”
The availability of renewable energy, however, will have a bearing on whether ferro-alloys producers can take advantage of the environmental push in 2024. For example, in the alloy production hub of Inner Mongolia renewable electricity is more readily available to smelters, according to sources.
“The utilization of green electricity will lower production cost for ferro-alloy producers in Inner Mongolia, and enhance competitiveness among the nation,” one manganese alloy producer in China said.
On the other hand, requirements to be more environmentally friendly may weaken the position of southern Chinese ferro-alloys smelters who do not have access to sufficient green electricity resources, the producer added.
Market participants told Fastmarkets that rising steel capacity in Southeast Asia will stifle steel prices in the region amid a slowdown in demand.
Sources said this has been evident in recent weeks when Chinese steel prices rose sharply, but prices in Southeast Asia remained subdued.
Traders said the prevalence of low-priced offers from Russia and Iran may have contributed to the persistently low buying indications, adding that the rapid capacity expansions in Southeast Asia will likely stifle prices more.
The South East Asia Iron & Steel Institute said that blast furnace-based steelmaking capacity in Southeast Asia could balloon by 25% over the next few years.
Energy transition will influence the upstream raw materials market in other ways too. The amount of vanadium pentoxide used in crude steel production is decreasing, while more vanadium will be used in green energy in 2024, including vanadium batteries. Vanadium batteries currently have less than 1% of the energy storage market share, sources said.
According to sources, vanadium batteries will likely experience a booming development period in 2025, with global vanadium energy storage consuming an estimated 45,000 tonnes of vanadium pentoxide.
Market participants will be keen to find out how the Chinese authorities’ move to protect strategic materials, including coal, iron and various alloys, will affect steel markets. The Chinese government on November 30 released an article titled “How to control 31 strategic industrial minerals”.
The article names the following resources as strategic minerals: molybdenum, iron, copper, uranium, boron, chromium, zirconium, manganese, nickel, tin, coal, vanadium, cobalt, gallium, lithium, aluminum, niobium, beryllium, titanium, tantalum, antimony, tungsten, indium, germanium, rare earth, fluorite and graphite.
“China from 2023 started to add strategic reserves of manganese alloy, and the move will continue in 2024,” another manganese alloy source in China said.
In addition, Beijing may continue to impose high export tariffs to limit the outbound shipments of these strategic resources, according to a ferro-chrome international trader source.