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With a demand picture that has been hammered and clouded by the coronavirus outbreak, the World Steel Association has opted to delay the release of its April Short Range Outlook (SRO).
The report, which covers the steel demand picture, is expected to be released in June, “when it is hoped we can make a clearer assessment on steel use going forward,” the World Steel Association said in announcing the delay of the SRO.
“The global steel industry is being impacted as our customers are hit by shutdowns, disrupted supply chains, collapsing confidence and delayed investment and construction projects, as well as a decline in consumption activity,” the World Steel Association said. “Financial market volatility and collapsing oil prices have further undermined investment.
“After slower than expected growth in 2019, mainly due to the deep manufacturing recession in the developed economies, we are seeing a further decline in global steel demand in the second quarter of 2020. The duration of the present disruption is currently impossible to judge.”
The World Steel Association posited, however, that the impact on steel demand in relation to the contraction in GDP may end up being less severe than during the 2008 financial crisis.
“The 2008 financial crisis was prompted by a severe reduction in industrial and investment activities because of the collapse of the financial system,” the World Steel Association wrote. “The current economic crisis for all service and direct consumer sectors may prove to be less steel intensive.”
Economically, all eyes are on China, the first to be hit and among the first to begin a transition back to what can be considered “normal,” pre-coronavirus activity.
“Since a resumption of operations led by the coastal areas started in late February, an economic recovery has been gradually taking place and the Chinese PMI jumped to 52 in March,” the World Steel Association said. “All steel-using sectors are expected to be ready for full operation by the end of April, but recovery of export-oriented categories will inevitably take more time.
“The construction sector is expected to be the last to resume full operations due to a slow return of workers. A strong rebound is foreseen in steel-using sector activity in the second half of 2020, especially in the infrastructure sector. On the other hand, a rebound in China’s manufacturing sectors is likely to be hampered by the different timeframes for lockdown exit strategies worldwide.”
Meanwhile, on the supply side, U.S. steel production for the year through April 18 was down 6.6% compared with the same period in 2019.
U.S. production for the year to date reached 27.6 million tons, down from 29.6 million tons last year. U.S. steel mills’ capacity utilization rate for the year through April 18 reached 76.6%, down from 81.5%.