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Steel production

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Global steel production for the first nine months of 2020 fell by 3.2% year over year to 1.35 billion tonnes, the World Steel Association (worldsteel) stated on October 23.

Production over the same time in 2019 was slightly over 1.39 billion tonnes, the Brussels-based organization stated.

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Global steel production falls, but China’s rises

China, the world’s largest steelmaking nation by volume, offset the total decrease with a 4.5% rise in its crude production to almost 782 million tonnes from slightly over 748 million tonnes, worldsteel figures indicated.

September alone saw China pour over 92.5 million tonnes of crude steel. That figure is up 10.9% from the 83.4 million tonnes China poured in September 2019.

Elsewhere in Asia

Vietnam saw the largest increase over nine months in Asia at 14.8% year over year. Total production reached 17.7 million tonnes from the 15.4 million tonnes produced in the first nine months of 2019.

Asia’s total crude production was almost unchanged at just over 1 billion tonnes from 999 million tonnes.

Japan had the largest drop in the region at 19.1% to 70.2 million tonnes from 84 million tonnes.

“The more interesting trend the data shows is the evolution of steel making in SE Asia,” MetalMiner’s Stuart Burns explained. “Japan is suffering but capacity in markets like Vietnam is rising rapidly, in part to meet domestic and regional demand but additionally as Chinese manufacturers offshore to circumvent tariff barriers they are facing in North America and Europe.

“Although much of the production from these new producers is currently flowing into local Asian markets, the quality is sufficiently high to give them access in time into Europe, Japan and elsewhere. The Asian steel story is not confined to China.”

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West European steelmakers are likely to see improvements in production and demand for their rolled products in 2021, following the adverse economic effects due to COVID-19 in 2020, industry watchers predicted.

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Better 2021 for Western European steelmakers

“Next year should be better if you take the view that this year was diabolical,” one analyst said about 2020. Steelmakers in France, Spain, Italy, Germany and Benelux saw aggressive production cutbacks in crude steel and rolled products as governments undertook containment measures and economies slowed.

“COVID-19 practically destroyed demand,” the analyst added.

Localized lockdowns — rather than the national ones that occurred earlier in the year around Europe, when it was the epicenter of the virus — will also help to boost activity, the analyst said.

“If people are out of their homes, then there is economic activity,” he noted.

The World Steel Association (worldsteel) also predicted in its Oct. 15 short-range outlook that crude steel production within the European Union would improve by almost 11% to 149 million tonnes in 2021. Meanwhile, the Brussels-based organization predicted 134 million tonnes of production for 2020.

The latter forecast reflected a 15.2% decrease from the over 158 million tonnes of crude steel poured in 2019, worldsteel noted.

“On the positive side, health systems are in a much better shape to tackle the pandemic now due to the lessons learnt from the first wave,” worldsteel noted.

Furthermore, there is a careful balance between “containing the virus and maintaining the viability of economies,” worldsteel added.

COVID uncertainty

However, worldsteel offered a caveat in its outlook.

“Added to this in the northern hemisphere there is uncertainty over how COVID-19 will evolve during the upcoming flu season which may have a serious impact on the outlook for 2021. The risk is tilted toward the downside. A W-shaped recovery cannot be ruled out and a full recovery in 2021 is unlikely,” the organization warned.

While worldsteel’s outlook did not break down the figures by country, it indicated in its September figures that West European steelmakers’ crude production for the first eight months of 2020 fell by 19.7% year over year to 59.1 million tonnes. Meanwhile, production totaled 73.5 million tonnes from Jan. 1-Aug. 31 in 2019.

Those same West European producers are now operating at below 60% of their crude production capacity, which is approximately 16 million metric tonnes per month, a second analyst said.

Western European steelmakers’ profits decline

Two major steelmakers with assets in Western Europe also reported notable drops in their production and in their financial results.

ThyssenKrupp’s Steel Europe subsidiary recorded a €706 million ($835 million) EBITDA loss for the first nine months of its 2020 fiscal year ending June 30. Meanwhile, it reported a €77 million gain ($91.1 million) over the same time in 2019.

Net sales were down 20% year over year to approximately €5.5 billion ($6.5 billion) from €6.3 billion ($7.5 billion), the report indicated.

Steel shipments by the German group saw a 12.8% decline in its steel shipments to 6.83 million tonnes from 7.82 million tonnes for the same time, the German group noted.

ArcelorMittal produces longs and flats at several locations in Western Europe. The steelmaker announced closures in March as part of its COVID containment measures in Italy, France, Spain, Germany, Belgium. Those closures continued in the second quarter of 2020, the Luxembourg-headquartered group said in its H1 report.

Total crude steel production in that group’s Europe segment for the first six months of 2020 fell to 16.1 million metric tonnes, down 30.5% year over year from 23.4 million metric tonnes.

European steel prices slide

Average steel selling prices in Europe were also down 11.2% to $636 per metric tonne from $716, ArcelorMittal said.

Prices for hot and cold rolled coil have already started rising since mid-2020, however, sources said.

“Restocking is happening, especially in the auto sector. This is pushing up prices, though it remains to be seen what happens,” the second analyst said.

Producers’ lower production levels will also strike a balance between supply and demand, the first analyst said.

Prices for hot rolled coil in West Europe now average about €491 ($581) per metric tonne EXW, up from lows of €433 ($512) in March.

The analysts questioned for how long any price increases would be sustainable. Many stockists were replenishing their lower volumes in the face of some renewed activity.

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