Day: 5 June 2020

In first 4 months of 2020, shipments of EU SSC dropped by -18,5%. In same period shipments of EU multi-product & proximity steel stockholding distribution were down by -8,7%.

EU Flat SSC Distribution

In first 4 months of 2020, shipments of EU SSC did fall  by -18,5% in a year-on-year comparison.

In April of 2020 compared to April 2019, Strip Mill Products shipments did drop by -50,8%, year-on-year, compared with -17,4% for the month of March.

The negative trend in SSC shipments was accompanied by higher SSC stock indices. 

When expressed in days of shipments, stocks at EU SSC reached 139 days in April 2020, compared to 76 days in April 2019.

For April 2020, the index of stock volumes did drop and noted at index 106, to be compared with index 117 in April 2019 (average 2015 = index 100).

EU Multi-Product & Proximity Steel Stockholding Distribution

In the first 4 months of 2020, EU Multi-Product & Proximity Steel Stockholding Distribution registered lower shipments for almost all products of its portfolio. Only rebar shipments noted higher.

As a matter of fact, during the first 4 months of 2020, total shipments dropped by -8,7 %, year-on-year.

April of 2020 compared to April 2019, “All Steel Products” shipments decreased, year-on-year by -28,0%.

Stock volumes index of EU Multi-Product & Proximity Steel Stockholding Distribution registered at 88 in April 2020, to be compared to a significantly higher index of 102 one year before (average 2015 =Index 100). When expressed in days of shipments, stock volumes leveled in April 2020 at 94 days of shipments, compared to  80 days in April 2019.

The World Steel Association is optimistic that government funding for infrastructure projects will help to support steel demand as economies recover from the effects of the coronavirus pandemic, Director General Edwin Basson said June 4, as the association reported it expects global steel consumption to contract by 6.4% in 2020.

In the US in particular, the pandemic has caused a sharp manufacturing recession, which is expected to reach its lowest point in the second quarter, worldsteel said in its Short Range Outlook report, released June 4.

In its updated forecast, worldsteel said it expects steel demand in the NAFTA region to drop 20% year on year to 108 million mt in 2020 from 135 million mt in 2019. For 2021, worldsteel forecasts NAFTA steel demand will total 114.7 million mt.

“The fall in oil prices has placed additional downward pressure on energy sector investment, which was already distressed prior to the crisis,” worldsteel said of the US steel market. “Surging unemployment is leading to reduced income and confidence, impairing residential construction. Although non-residential construction is faring relatively better, it is expected to face a decline in 2020 and a slight recovery in 2021.”

Much of the decline in US construction activity has likely already been seen in recent months as states stopped some construction activities amid more aggressive virus mitigation efforts, Basson said in a video call.

“We think [infrastructure] most definitely will become part of government policy as an initiative in order to get economic systems to revive and recover and therefore we are quite optimistic that expenditure on infrastructure investment around the world may also continue at quite a nice pace,” he said.

In its outlook, worldsteel noted that overall it does not expect the decline in construction activity to be as severe as the drop seen during the financial crisis of 2007-09.

Residential construction activity will likely be constrained over the next year, however reconditioning work on existing family homes seems set to be supported, particularly with many people staying home and spending less amid stay-at-home orders, Basson said.

Non-residential construction may be the area that sees the most adjustment over the course of the next year or two as businesses look at their value chains and make changes in favor of shorter supply chains, he added.

— Justine Coyne

The World Steel Association said June 4 it expects annual demand for steel to fall by 6.4% to 1.65 billion mt this year before recovering close to pre-pandemic levels in 2021, led by China and the construction sector.

“The decline in steel demand in most countries will be less severe than during the global financial crisis as the consumption, which have been hit hardest, is less steel-intensive,” said Edwin Basson, worldsteel general director during a video conference to its Short Range Outlook report. “In many developed economies, steel demand was already at a low level, having still not fully recovered from 2008.”

The association sees annual steel consumption recovering to 1.72 billion mt in 2021, just shy of levels of demand in 2019.

Steel industries have been hit by a general freeze in consumption, shutdowns and disrupted supply chains caused by the Coronavirus pandemic. Demand is expected to have declined significantly in most countries, especially during the second quarter, with consumption improving slowly as lock downs ease in the second half of the year, said the association.

Reductions in global steel demand will be mitigated somewhat by a faster recovery in China. The world’s second-largest economy is fast approaching normalization, except for the hospitality and tourism sectors. By the end of April, all major steel-using sectors in China were back to near full productivity, with demand expected to grow by 1% this year.

Europe, North America, India and steel markets in developing Asia are expected to take longer to rebound, said Basson.

Construction recovery

The association predicted that the construction sector in China could be a “useful” tool for the government to sustain the demand recovery in the economy. Automotive and mechanical industries have taken the biggest hit from the crisis among the steel-using sectors. Car making was already seen under pressure from the transition to electric vehicles and government policies to reduce passenger transport density in cities. The automotive industry is expected to see a 20% drop in sales this year and a recovery to pre-crisis levels of activity could take several years, said the association.

Mechanical machinery manufacturers will also be hit by a substantial decline in demand this year as investment projects are put on hold, or cancelled.

The worldsteel outlook was postponed and released in June due to the uncertainties created by the pandemic. The association is expected to release another outlook in October.

— Annalisa Villa

The coronavirus emergency across the world could well accelerate the ongoing regionalisation of markets, Edwin Basson, director general of the association said in a press briefing this week.

The executive noted that the tendency to move away from globalisation was already seen during recent years, but the latest Covid-19 emergency could well accelerate further the need also for steel trade to become more regional and to shorten supply chains.

While worldsteel does not comment specifically on local trade policies, since 2016 a rapid decline of steel international trade has been seen, accelerated further by the imposition of the Section 232 measures in the US. Now this trend seems to have gathered pace again as many countries close further possibilities for international trade to protect their local steelmakers.

According to the latest figures published by worldsteel, steel products international trade in 2019 represented only 25.1% of the total steel production in the world. This share is the lowest since 1980. Back in the 1997-2008 period the share stood steadily above 35%

In volumes terms the 2019 figure of 437 million tonnes traded internationally is the lowest since 2013. Given the expected steel demand reduction for 2020, the traded volumes globally should lower further this year, Kallanish notes.

Steel Demand Forecast – June 2020
(million tonnes)	2019	2020	2021
EU 28	158,1	133,1	147
Other Europe	33,8	33,3	36,5
CIS	58,8	52,7	56,5
NAFTA	135	108	114,17
Central/South America	42,4	35,1	39,3
Africa	36,4	33	34,9
Middle East	48,7	40,2	45,4
Asia and Oceania	1253,3	1218,6	1243,2
WORLD	1766,5	1653,9	1717,4

The World Steel Association has issued its outlook for steel apparent demand, indicating that this year global demand will fall by -6.4% y-o-y, before recovering 3.8% y-o-y in 2021, Kallanish reports.

The outlook was postponed by the association due to the uncertainties created by the Covid-19 outbreak. “The COVID-19 crisis, with its disastrous consequences for public health, also represents an enormous crisis for the world economy. Our customers have been hit by a general freeze in consumption, by shutdowns and by disrupted supply chains. We therefore expect steel demand to decline significantly in most countries, especially during the second quarter. With the easing of restrictions that started in May, we expect the situation to gradually improve, but the recovery path will be slow,” worldsteel said.

The fall expected for this year is in line with the one registered in the 2008-2009 financial crisis, nevertheless Edwin Basson, director general of worldsteel, noted that this time around steel demand is expected to fall less compared with the dramatic fall projected for global GDP.

While most of the global steel using countries will be strongly impacted by the fall, China is expected to see its steel demand growing 1% y-o-y. Together with Turkey and Vietnam, China is the sole country expected to increase steel use this year among the top 10 users globally. India, meanwhile, the second largest steel user globally, will see its demand falling by -18% y-o-y.

Edwin Basson added that the one presented currently is the most realistic scenario. Worldsteel has also prepared a worst case scenario, which indicated a more dramatic demand fall.  “One key uncertainty remains the possibility of second and third waves of virus outbreak and how these will impact the economy depending on countries’ approaches,” Basson explains.

While worldsteel expects a swift recovery of 3.8% y-o-y for steel demand in 2021, taking volumes back to above 1.7 billion tonnes, it is likely that 2019 demand levels will not be fully recovered until 2022.