World of steel divided between Europe, the US and China
by David Fleschen
According to the steel analysis service MEPS, world steel production should fall by around 4% to 1.8 billion tonnes this year. In North America, production in the 2nd quarter is expected to fall by more than 20% year-on-year, following a 3.6% drop in the 1st quarter. However, the pandemic is likely to have a particularly severe impact in the EU, with production already down 10% year-on-year in the 1st quarter and even falling by up to 30% in the 2nd quarter.
The EU should only produce slightly more than 30 million tonnes in the 2nd quarter, which is even less than at the low point of the economic crisis in 2009. According to the European steel association EUROFER, the decline in demand for steel in the EU this year is unprecedented and difficult to estimate. In the fourth quarter of 2019, demand had already fallen by 10.8% and by 5.3% for the year as a whole to just 154 million tonnes. This was mainly due to the trade war, the brexite uncertainty and a weaker economy. The association does not see any normalisation before the 4th quarter of 2020 or even the 1st quarter of 2021 and has therefore been calling for a massive 75% reduction in import quotas for the 2nd and 3rd quarters for some time.
This is because in China, by far the world's largest steel producer and exporter, production is obviously remaining stable. According to MEPS, it even increased there by 1.3% in the 1st quarter despite the lockdown. For the year as a whole, the country is expected to produce another 1 billion tonnes of steel. According to the Chinese steel association CISA, its almost 100 members had even reached the highest daily production since September 2019 with over 2 million tonnes of steel per day at the end of April. So there is still no light at the end of the long tunnel in sight for steel prices in Europe.
Source: Commerzbank Research, Photo: Fotolia