Pavel Ignatov/Adobe Stock
Despite the coronavirus outbreak’s widespread humanitarian and economic impact, steel production continued to chug along in February.
According to the World Steel Association, global crude steel production reached 143.3 million tons in February, up 2.8% compared with February 2019 production.
China’s production grows 5.0%; U.S. up 3.0%
China’s crude steel production reached 74.8 million tons, marking a 5.0% increase compared to February 2019.
Elsewhere in Asia, India’s production reached 9.6 million tons, up 1.5% from February 2019. Japan’s production reached 7.9 million tons, up 2.2% year over year.
U.S. production totaled 7.2 million tons, marking an increase of 3.0% compared to February 2019.
Earlier this week, the American Iron and Steel Institute (AISI) reported the U.S. steel sector operated at a capacity utilization rate of 80.7% for the year through March 28 — down from 81.6% for the same period in 2019.
By tonnage, U.S. production for the aforementioned period fell 1% year over year, down to 23.65 million tons.
In the E.U., Italy’s production increased 0.1% to 2.0 million tons, while France’s fell 1.3% to 1.2 million tons.
Brazil’s crude steel production fell 1.3% to 2.7 million tons, while Turkey’s jumped 8.2% to 2.9 million tons.
Crude steel production in Ukraine was up 1.2% to 1.7 million tons in February.
Steel demand takes hits, oil price posts historic quarterly drop
On the price front, U.S. steel prices have trended sideways over the last month. U.S. cold-rolled coil (CRC) was up 1.06% as of Tuesday from a month prior, while U.S. hot-dip galvanized (HDG) was up 1.21% to $838/st.
U.S. hot-rolled coil (HRC), meanwhile, was down 1.4% to $562/st. However, HRC for June delivery was down 15.19% to $469/st.
As noted here previously, U.S. automakers have idled plants amid the coronavirus outbreak, delivering a blow to steel demand.
On the supply side, steel mills have announced production closures. U.S. Steel on March 27 said it would idle its #4 blast furnace at its Gary Works immediately. U.S. Steel said it would also temporarily idle blast furnace A at its Granite City Works.
While the coronavirus outbreak has captured a majority of the attention in terms of market impact, the recent oil price decline is also significant, as MetalMiner analysts noted in a recent webinar on the subject.
MetalMiner’s Stuart Burns this week delved into the subject of the falling oil price and just how far it can go. While that remains to be seen, Moody’s Investors Service says depressed oil and natural gas prices will stick throughout 2020.
“The worldwide economic damage from the coronavirus pandemic will persist into the second quarter of 2020, if not longer, before economic fundamentals improve in the second half,” Moody’s said in an analysis March 26. “The sharp reduction in demand for oil products worldwide and the supply shock resulting from the disagreement among the OPEC+ oil-producing countries in the face of the worldwide coronavirus crisis has caused extreme volatility in oil prices. The depressed oil prices of the first quarter of 2020 will continue through 2020, before the market begins to rebalance as supplies finally decline.”
The WTI crude price was down to just over $20 per barrel on Tuesday, down from around $63 per barrel during the first week of the year.
Brent crude, meanwhile, was down to just over $26 per barrel on Tuesday, recovering slightly after reaching an 18-year low on Monday.