EU steel imports from Turkey have dropped -20% on-year in 2020, but Turkey’s swift post-Covid-19 steel output recovery threatens the bloc with higher imports from this origin in the coming months, says Laurent Plasman, Head of Operational Marketing, ArcelorMittal Europe Flat Products.
This is because Turkey’s economy remains vulnerable to currency exchange fluctuations and inflation.
Despite the recovery starting in the third quarter, the eurozone’s GDP is expected to fall -7.4% in 2020, rising by 4.2% in 2021, according to the European Commission. The recovery will be “…bumpy and patchy,” Plasman said at the Kallanish Europe Steel Markets 2020 virtual conference on Wednesday.
The eurozone suffered unprecedented demand output disruptions this year, with the automotive industry being worst hit among end users. Real steel demand plunged -58%, with automotive losing -67% in both southern and northern Europe.
As major steel producers idled their blast furnaces to mitigate losses, they were unprepared for a swift rebound in demand elsewhere, thus creating a vacuum of supply. This continues to drive prices as demand surges on to pre-pandemic levels.
Although the negative impact of the Covid-19 pandemic on global steel demand is significant, the demand reduction will amount to only -2.4% globally in 2020 to 1.73 billion tonnes. The pandemic impact has been mitigated chiefly by China’s strong recovery. China’s steel demand is projected to grow 8% on-year in 2020 to 0.95 billion tonnes, and remain at this level in 2021. Global demand may rise up to 4.1% on-year in 2021, Plasman noted.
China has been recovering strongly since February, having overcome the Covid-19 effects first, and despite a strong contraction in Q1 should reach 1.9% GDP growth in 2020, and 8.2% in 2021, according to the most recent IMF forecast. But Chinese overcapacity remains an issue, with 200 million tonnes estimated by the government, which is likely to be 300mt in reality.