In 2020, global finished steel consumption fell by 1.1% to 1,752 million tonnes, compared with 1,771 million tonnes in 2019, with the decline primarily driven by the impact of the COVID-19 pandemic. China continues to be the main driver of global demand, with growth of 9.0% and consumption of 1,011 million tonnes over the reporting period. Global demand, excluding China, contracted by 12.1% to 741 million tonnes, versus 843 million tonnes in 2019. Consumption in the EU dropped by 13.1% due to the impact of COVID-19 on automobile and construction demand.
Global crude steel production in 2020 declined by 1.0% to 1,756 million tonnes, mainly driven by COVID-19 related lockdown measures, which forced steel producers to close. Chinese production totalled 1,019 million tonnes, up 7.1% year-on-year, compared with 952 million tonnes in 2019. India’s production declined by 7.9% to 98 million tonnes, driven by lockdowns throughout the country. Crude steel production in the EU fell by a further 13.1% year-on-year, as a result of increasing environmental requirements and responses to pandemic.
Steel markets tightened rapidly at the end of 2020, as demand outpaced supply across the supply chain amid strong restocking activity. This led to a surge in steel prices in Q4 2020, as supply failed to keep up with a recovery in demand. Average steel prices, based on the CFR slab FE&SEA benchmark, increased from US$361 per tonne in Q2 2020 to US$497 per tonne in Q4 2020. As a result, the average price in 2020 amounted to US$424 per tonne, down 3.8% year-on-year from US$448 per tonne in 2019.
Despite lockdowns in the early part of 2020, global consumption of iron ore continued to grow, rising by 0.7% to 2,202 million tonnes in 2020. Growth in end use demand in China and strong rebar margins provided steel producers with incentives to maintain high output. The recovery in demand from manufacturing and automotive industries demand added momentum and pushed HRC margins to their highest for two years. Iron ore demand rose by 7.1% to 1,420 million tonnes in China. Other key markets showed reductions of 4.7% to 70 million tonnes in South Korea and by 6.1% to 144 million tonnes in India, driven by lower steel production. European and US markets also declined by 14.3% and 17.3% respectively.
Total iron ore production increased by 0.8% to 2,272 million tonnes in 2020, compared with 2,253 million tonnes in 2019. Production in Brazil decreased by 6.5% during the year to 333 million tonnes, as Brazilian iron ore producers faced challenges with poor weather conditions, one of the worst COVID-19 outbreaks in the world and a legal environment that challenged management and delayed mine restarts. China continued to ramp up domestic production of iron ore in order to attempt to meet domestic steelmaking demand, increasing production by 6.1% to 363 million tonnes in 2020.
Seaborne iron ore prices hit multi-year highs in the final quarter of 2020, with demand supported by strong steel margins and high output, driving the 62% Fe Iron Ore fines index to a nine-year high of US$177 per dry metric tonne CFR China in December. The outperformance throughout 2020 was driven by a combination of strong demand and supply fundamentals, with Chinese demand continuing to grow and supply constraints persisting. Average iron ore prices climbed by 16.1% to US$108 per tonne in 2020, compared with US$93 per tonne in 2019.
In 2020, global metallurgical coal consumption declined by 1.8% year-on-year to over 1,142 million tonnes. In China, consumption remained flat year-on-year and amounted to 966 million tonnes as crude steel production remained robust. Indian coking coal imports decreased by 8.7% to 62 million tonnes, amid lower steel production driven by lockdowns. Metallurgical coal consumption in Europe continued to fall, by 12.1% in 2020, also amid lower demand from steelmaking companies due to COVID-19 restrictions.
Total coking coal production declined by 2.3% year-on-year to 1,142 million tonnes during the period. China continued to increase domestic metallurgical coal supplies, with growth of 0.3% to 725 million tonnes, while Australia posted a 4.8% decline to 178 million tonnes, as a result of declining exports through its major Queensland ports.
Metallurgical coal prices experienced a dislocation in 2020 with CFR prices trading higher while FOB Australia benchmarks fell. The predominant reason for this trend was China’s decision in October 2020 to ban imports of Australian coal, thereby reducing demand for Australian imports, while pushing up domestic prices due to a reduction in supply. The oversupply of Australian material in the ex-China market put pressure on spot FOB prices. As a result, the average Australian FOB spot price was US$125 per tonne in 2020, down 29.8% from US$178 per tonne in 2019.
Despite COVID-19 containment measures, global vanadium demand reached an estimated 108 metric tonnes of vanadium, up 5% year-on-year, with increased consumption from rebar producers in China offsetting a decline in demand from other regions. The ferrovanadium price was under pressure during mid 2020, reaching a low point in July at US$22 per kilogramme of vanadium, due to lower buying activity in most regions outside China. However, the market began to recover in Q4, which led to a price uptick, with an average 2020 price of US$25 per kilogramme of vanadium (down 40% year-on-year).