Demand recovery causes long delivery times for steel products
by David Fleschen
According to data released Tuesday by the World Steel Association, global steel production rose 4.1% year-on-year in February to 150.2 million tons. On a daily basis, a record level of 5.36 million tons was achieved. The increase occurred largely because of China, where production expanded by 10.9%. China was in Corona-related lockdown a year ago, therefore the rate of increase is also a base effect. The sharpest declines among the major steel-producing countries were in the USA and Germany, at over 10%. According to the German Steel Federation (Wirtschaftsvereinigung Stahl), production in this country was affected by the bad/cold weather, as not enough raw materials could be delivered to the steel mills because of this.
India and Japan, the world's second and third largest producers, also produced less steel. According to S&P Global Platts, referring to the Association of European Steel Producers (Eurofer), the assumed production increase in the EU this year is not sufficient to satisfy the expected demand recovery supported by fiscal policy measures. Accordingly, this has already led to shortages of various steel products and caused their prices to rise sharply. The shortage is partly reflected in low inventory levels and is expected to continue into the third quarter. This assessment is also shared by the steel analysis service MEPS. It expects prices for hot-rolled steel in Europe to climb to record levels in the coming weeks before a correction in the second half of the year. At that point, markets should be more likely to rebalance. According to MEPS, many producers of flat steel products currently only serve contract business and regular customers. Most producers of long steel are fully booked.
Source: Commerzank Research, Photo: Fotolia