Steel Markets Show Signs of Strengthening

Steel production may be picking up again after the COVID-19 pandemic sent it reeling.

Steel producers and market followers project an increasingly strong recovery as economies reopen. 

“As economies are reopening without a vaccine or cure in place, significant downside risks exist. If the virus can be contained without second and third peaks, and if government stimulus measures are continued, we could see a relatively quick recovery,” Al Remeithi, chairman of the worldsteel Economics Committee stated in a press release announcing the World Steel Association’s most recent short-range outlook.

Steel demand will decrease by 6.4% this year before increasing by 3.8% in 2021, worldsteel projects. “This year’s reduction in global steel demand will be mitigated by an expected faster recovery in China than in the rest of the world.”

The second-quarter was brutal. 

Steel production slowed significantly or stopped entirely at facilities around the world in the second quarter. Quarterly earnings reports reflected the pandemic’s impact.

• US Steel’s prices and shipments decreased.
• JSW Steel cut output and lost money.
• Nucor’s steel shipments declined by 27%.
• Schnitzer Steel’s recycling division incurred losses.

Worldsteel reported that production declined 7% in June from the same month a year ago. World crude steel production was down by 6.0% through the first six months of the year. 

In the US, steel production decreased by 34.5% year-over-year in June and by 18.3% for the first six months, according to worldsteel. Steel imports were down 21% year-to-date through June, the American Iron & Steel Institute (AISI) reported. 

Recovery is underway.

Slowdowns have stretched into the third quarter but not to the same severity. Signs of recovery have emerged.

In the US, domestic raw steel production for the week ending July 25 was 28.5% lower than a year ago but 1.1% better than the previous week, according to AISI. Capability utilization was 58.9% compared to 79.4% in 2019 and 58.3% in the week ending July 18.

Idled capacity has restarted as steel mills have responded to increased demand. Argus Media estimates that more than 19 million tons of flat-rolled steel capacity was taken offline in the US beginning in March.

“As US states began to reopen in May and June, scrap flows returned much faster than demand,”  SA Recycling CEO George Adams reportedly said, in sharing his ferrous outlook with Recycling International. “After dropping by 50% and more during the initial April shutdown, US scrap intakes came back quickly and are now down only 10-15% on pre-COVID levels.’

Image courtesy of worldsteel