Steel industry and Covid-19: state of play

The impact of Covid-19 pandemic on the global industry has been dramatic so far. As proof of this, in the second quarter of 2020 - in the middle of the so-called first wave of infections - numerous individual country PMI* readings fell to the lowest levels ever recorded.

What about the steel sector? Despite the bleak picture mentioned above, with the lifting of restrictions, in the third quarter of the year global steel demand has improved considerably. In fact, the post-lockdown recovery has been stronger than expected and several individual country PMIs even surpassed pre-pandemic figures (e.g. the IHS Markit Brazil Manufacturing PMI rose to 66.7 in October – after hitting the bottom in April with 36.0).

Although steel demand is getting better, steel output still remains below 2019 levels. The pandemic led global steelmakers to idle capacity and cut production by an unprecedented amount between March and June. MEPS estimates that regions like Europe, Japan and the US will experience double figure drops in steel production in the full twelve-month period. Contrariwise, in China, finished steel output continues to grow and is expected to reach a new all-time record in 2020.

However, the picture is still uncertain and it is difficult to make precise forecasts, as many countries are reintroducing or increasing containment measures, including new lockdowns. Of course, Governments and companies are more prepared to face a new wave of infections: while on the one hand, the recovery will certainly slow down, on the other, it is unlikely that steel demand will fall back to the record lows witnessed early this year.

Read the full article on MEPS >>

*The IHS Markit PMI (Purchasing Managers Index) is one of the global leading economic indicators. It is based on monthly surveys of a group of carefully selected private sector companies representing the world's leading and developing economies.

Photo by worldsteel / Seong Joon Cho