The impact of the coronavirus (Covid19) outbreak on the steel market is expected to be only temporary, according to a European trading source. A change in sentiment could be seen as soon as from the end of February, says Mario Borsese, managing partner at the Swiss-based trading house DP Trade.
“The impact on the market so far of the virus has been important,” he said. “The recovery seen since the beginning of the year in Europe has frozen during recent weeks and a downturn in prices in Asia has been registered.”
Looking ahead, Borsese agrees with the positive view shared by many traders in the European market. “I believe the negative impact on the steel market is only temporary, I believe prices will rebound already by the end of February,” he says.
Overall the effects of Covid19 on Chinese demand and consumption could well be limited when we will look at the overall 2020 number. “I believe personally that consumption of steel in China will not slow down in 2020. The local government will stimulate the demand during the remainder of the year,” Borsese notes.
Specifically, in Europe the recovery in prices seen during recent months will continue as the market needs to recover margins after a very difficult 2019, the trader adds. “The reality is that in 2019 everyone destocked massively. The supply of steel (domestic + imports) decreased significantly but real consumption did not move as much compared to 2018,” he says.
According to Kallanish price series, after a recovery initiated in mid-October 2019 most HRC prices across the world have lost some ground in recent weeks due to the uncertainties created by the Coronavirus outbreak. Chinese, Black Sea and Turkish HRC export levels all moved down by around $10/tonne.