Coronavirus Vs Steelmakers: highlights from the world
The coronavirus outbreak, started in Wuhan at the end of 2019, has hurt the global steel industry in a number of ways, with severe slowdowns and supply chain disruptions, even halting production altogether in some regions.
How are things going in this first quarter of 2020? How is this affecting the global steel production? Let’s take a quick world tour, and see how the most prominent steelmaking countries fare.
China
According to the latest survey of the Chinese national Bureau of Statistics, the country’s crude steel production output surged higher by 3.1% in January and February, despite the outbreak.
Steel mills remained optimistic throughout the whole period, hoping for a sharp recovery in steel demand as the country returns to a state of normalcy. Incidentally, the epidemic has almost been wiped out of the country.
USA
USA steelmakers are closely monitoring the situation, but they still haven’t felt the impact of the virus outbreak. S&P Global Platts tells that US Steel is not experiencing issues with raw materials and there are no delivery problems. However, should an emergency arise, many steel making companies, including the biggest names in the industry, have already prepared some contingency plans.
Vietnam
The coronavirus restrictions are severely slowing Vietnam’s economic activity and tightening credit available to steel mills and buyers. Demand for Vietnamese steel has fallen sharply as construction projects have been halted. According to the VSA, steel consumption across the country has also experienced a dramatic drop by 35%, and exports have fallen by 20%. Other steel-related products also reported a 30-40 per cent drop in demand.
Italy and Europe
Italy is currently the most affected country in Europe, yet prices remain mainly stable, while market participants assess developments not only in the domestic market but also in the rest of Europe. The Italian steelmakers and services centers are technically still open, but due to the restriction imposed by the Italian government and some of the biggest Italian steelmakers temporarily suspending their production, the market is currently on hold.
The virus is now also spreading out to the rest of Europe (mostly in Spain, France, and Germany), leading to an overall decrease in end-user demand. This is likely to result in a domino effect on the rest of the supply chain later on, this year.
Updated to March 22, 2020: all industrial and commercial production activities in Italy have been suspended by governmental decree until April 3, with a few exceptions (e.g., companies working remotely as well as companies part of the health, pharmaceutical, agricultural, food industry, or aerospace and defense industry can continue to work).
South Korea
Korean news agencies state that the COVID-19 outbreak has left a profound mark on the South Korean economy, causing a decline in domestic demand led by the service sector, disruptions in manufacturing, and slowdowns in investments.
The country plans to seek a rebound this year, but the global outbreak of the new coronavirus has made the goal less feasible.
Regarding the steel industry, the possibility of virus spread at plants is currently low, with a limited impact from the recent confirmed cases.
Photo by worldsteel / Seong Joon Cho
