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According to the British analytical agency MEPS International Ltd., in March a gray cloud hung over the steel industry, which marks an unprecedented time. In all regions, steel mills shut down or reduce production - either voluntarily or by government directive. Typically, lower demand will lower steel prices. However, many steel price references published in the MEPS International Steel Review did not change during most of March.
Steel producers close their businesses, and workers are sent home because authorities are trying to control the spread of the virus, which is spreading rapidly, especially in the Western world.
Factories are closing all over the United States, with announcements made by several manufacturers recently. Many other steel makers are expected to follow suit in the coming weeks. US steel mills are asking to be included in the list of “key industries” to prevent forced shutdowns. Despite the decrease in the availability of steel, some weakness is found in US prices this month.
Steel production is declining in Europe, which is currently one of the regions most affected by COVID-19. MEPS also notes problems with lack of transport and delays at borders. Long queues of trucks are reportedly awaiting entry into some countries. This limits supply to many companies across the EU and helps maintain continental steel prices despite falling demand.
Several manufacturers across Asia are limiting steel production amid weakening demand. This is due to the continuing effects of an outbreak of coronavirus. While production is declining in most countries, production in China is recovering. Moreover, traders in this country are looking for export opportunities to unload excess stocks. Excess supply remains a characteristic feature of the Asian market, despite the less serious consequences of using COVID-19 compared to Western countries.
Factories, service centers, traders and end users are struggling with the emerging crisis that has gripped the global steel market. Difficult conditions are expected to continue and are likely to worsen in the coming weeks and months. The recession in the economic climate will inevitably affect the steel market. Consequently, price reductions are projected in the near future in all regions investigated by MEPS.
