Global Steel Industry Downturn as COVID-19 Disrupts Supply and Demand
It is said that time flies over us but leaves its shadow behind. There is certainly a grey cloud hovering over the steel industry, this month. We are in unprecedented times. Steel mills, in all regions, are shutting plants or cutting production – either voluntarily or enforced by national governments. Ordinarily, reduced demand would result in steel price reductions. However, many of the steel price references, published in MEPS International Steel Review, have held up, during most of March.
Steel manufacturers are closing their facilities and workers are being sent home, as authorities attempt to control the spread of the virus that is quickly taking hold – particularly in the western world.
Plants are closing across the US, with announcements made by several producers, recently. Many other steelmakers are expected to follow suit in the coming weeks. American steel mills are requesting to be included in a list of “essential industries” in order to prevent mandatory stoppages. Despite reduced availability of steel, a degree of weakness is detected in US prices, this month.
Steel production is being curtailed in Europe, which is now one of the regions worst affected by COVID-19. MEPS also notes issues with transportation shortages and delays at borders. Long queues of trucks are, reportedly, waiting to enter certain countries. This is restricting supply to many companies across the EU and is helping to support steel prices on the continent, despite falling demand.
Several producers across Asia are restricting their steel manufacturing amid weakening demand. This is due to the ongoing effects of the coronavirus outbreak. While output reduces in most countries, production is rebounding, in China. Moreover, traders in that country are seeking export opportunities, to offload excess stocks. Oversupply remains a feature of the Asian market, despite less severe effects from COVID-19 being witnessed, when compared with those in western nations.
Mills, service centres, traders and end-users alike are struggling with the developing crisis that is engulfing the global steel market. Difficult conditions are expected to persist, and are likely to escalate, over the coming weeks and months. A downturn in the economic climate will inevitably affect the steel market further. Consequently, price declines are predicted in the near term, in all regions researched by MEPS.