In October 2020, global steel production increased compared both with 2019 and the previous month, closely approaching the previous year's record highs. According to the World Steel Association (WSA), 161.89 million tonnes of steel were produced during this period, which is 7% above the October 2019 level and 3.5% above the previous month's result. The industry has seen the highest growth rate in the last three years. 1.511 billion tonnes of steel were produced worldwide for 10 months of 2020, which is 2% below the previous year's result. It should be noted that China accounted for 57.8% of the total steelmaking: the country's share in the global output has been growing continuously since April 2020. Steelmaking in Vietnam has also risen to record highs, according to the latest issue (No. 1401) of AK&M Information Agency's monthly paper "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Ferrous and Non-ferrous Metallurgy" issued on December 2, 2020.
Russia increased steel production by 4.3% YoY to 6.05 million tonnes in October, staying the world's fifth largest steel producer and coming very close to the fourth position (according to the WSA). For 10 months of 2020, the steel output in Russia decreased by 0.8% to 59.327 million tonnes (-18.4% in the US and Japan, -7.7% in South Korea, -14.4% in India). China increased production by 5.5%, Vietnam by 28.8%.
The most profitable feedstock in 2020 was iron ore. According to S&P Global Platts, it advanced in price by almost 38%. According to analysts, the steady market helped the mining industry avoid severe damage from the coronavirus pandemic crushing other sectors such as oil and gas due to a slump in demand for energy. As forecasted by Financial Times, average iron ore prices will rise to $100 per tonne on average in 2020 hitting 7-year highs.
The average copper price was $7,095.1 per tonne in November 2020 increasing by 5.8% against October. As of November 30, copper advanced in price to $7,674.5 per tonne. It should be noted that demand for copper is considered as a touch-stone of the global economy condition, the long-term price growth demonstrating traders' optimism. The metal prices are now close to nearly 7-year highs on the back of consumers' lower copper inventories, a positive outcome of COVID-19 vaccine trials, a weaker US dollar, and rising hopes for stimulus measures from governments.
Mining has become more challenging in Russia due to a high tax burden, among other things. In particular, the State Duma adopted a law to increase the Mineral Extraction Tax 3.5 times for fertilizer producers and steelmakers, with an exception for new investment projects implemented under investment protection and promotion agreements. Besides, miners have recently been entering into conflicts over protected areas. In November, the government approved the proposal to draw up a bill imposing restrictions on securing the regional investment project status for gold mining companies from 2021. This status entitles companies to MET and income tax benefits.
An in-depth review is provided in issue 1401 of AK&M Information Agency's "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Ferrous and Non-ferrous Metallurgy" monthly paper issued on December 2, 2020.
