Steel demand in the developed economies is expected to decline by 17.1 percent in 2020, according to Worldsteel. While the association says it does not expect a stimulus program on the scale of the one the country introduced in 2009, if the global economic environment affects the recovery of the Chinese economy more profoundly, the government might need to provide a further boost, implying an upside risk to steel demand.ĭeveloped economies. Worldsteel says it expects Chinese steel demand to increase by 1 percent in 2020, with the benefit from infrastructure projects initiated in 2020 carrying over and supporting steel demand in 2021. Recovery in manufacturing will be slower because of the severe recession in the global economy, but the automotive industry will get some support from incentive measures, the association adds. The recovery of steel demand will be more visible in the second half of 2020, Worldsteel says, and will be driven by construction, especially infrastructure investment, as the government has put forward several new infrastructure initiatives.
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Following the lifting of the lockdown in Wuhan April 8, the construction sector has reached full productivity. Industrial production fell by 8.4 percent, with the automotive sector showing the worst decline of 44.6 percent in the first quarter.īy the end of April, all major steel-using sectors were back to near full productivity, even though the full operation of the manufacturing sector is hindered by the collapse in export demand, Worldsteel says. The deep freeze in economic activity during February resulted in a decline of 6.8 percent in gross domestic product (GDP) and 16.1 percent in fixed-asset investment in the first quarter. Coming out of the lockdown ahead of other countries, China’s economic recovery started in late February, Worldsteel says, and its economy is approaching normalization quickly apart from the hospitality and tourism sectors. Changes in working procedures in the steel-using sectors to fulfill the requirements of social distancing could lead to lower productivity and an extended production cycle.Ĭhina.
If the virus can be contained without second and third peaks, and if government stimulus measures are continued, we could see a relatively quick recovery.” Recovery prospects by country or regionĪs most countries have been gradually reopening from their lockdowns since mid-May, recovery of economic activities is expected in the third quarter.Įven though all steel-using sectors are affected by the lockdown measures, the mechanical machinery and automotive sectors are highly exposed to a prolonged demand shock and to disruption in global supply chains, the association says. Remeithi stresses that the Worldsteel forecast is being presented “at a time of high uncertainty.” He adds, “As economies are reopening without a vaccine or cure in place, significant downside risks exist. “In many developed economies, steel demand was already at a low level, having still not fully recovered from 2008.” “However, it is possible that the decline in steel demand in most countries will be less severe than during the global financial crisis as the consumption- and service-related sectors, which have been hit hardest, are less steel-intensive,” he continues.
With the easing of restrictions that started in May, we expect the situation to gradually improve, but the recovery path will be slow. We, therefore, expect steel demand to decline significantly in most countries, especially during the second quarter. “Our customers have been hit by a general freeze in consumption, by shutdowns and by disrupted supply chains. “The COVID-19 crisis, with its disastrous consequences for public health, also represents an enormous crisis for the world economy,” Al Remeithi, chairman of the Worldsteel Economics Committee, says. Worldsteel says it expects China to recover more quickly than the rest of the world, mitigating the 2020 reduction in global steel demand. The Worldsteel forecast assumes that most countries’ lockdown measures continue to be eased during June and July, with social distancing controls remaining in place, and that the major steelmaking economies do not suffer from substantial secondary waves of the pandemic. The association says it expects steel demand to recover in 2021 to 1,717 million metric tons, an increase of 3.8 percent compared with 2020. The World Steel Association (Worldsteel), Brussels, has released its Short Range Outlook (SRO) for steel demand in 20, predicting that steel demand will contract by 6.4 percent, dropping to 1,654 million metric tons, because of the upheaval created by the COVID-19 pandemic.
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