Latest Updates: Coronavirus Impact on the Steel Market

Snapshots of key developments in the steel market in the wake of coronavirus (COVID-19)

Supply

  • In Ukraine, Zaporizhstal slashed steel production by 34.5% to 223,300 tonnes in April. The fall was due to overhauls of blast furnaces No2 & No5 as well as poor market conditions. (05 May 2020)
  • Russia‘s Evraz reported 2.9% y/y rise in sales of total steel products but a decline of 10.4% Q/Q. Sales of semi-finished up by 7.6% y/y, but fell by 15.3% on Q/Q. (30 April 2020)
  • Crude steel production in Japan declined by 12.5% in March compared to the last year, reached 7.95 million tonnes, according to the ministry of economy, trade and industry (METI). (30 April 2020)
  • In the US, Liberty Steel Georgetown is getting closed for at least three months as coronavirus pandemic reduced demand for its products. (24 April 2020)
  • World crude steel production declined by 6% year-on-year in March 2020, reached 147.1 million tonnes, according to the World Steel Association. (24 April 2020)
  • Nippon Steel Corp announced on 20th April that it would temporarily close its third blast furnace (BF) in Japan in mid-May due to lower demand for steel in the automotive and construction sectors. (21 April 2020)
  • Ukraine‘s steel production fell by 3.4% to 5.32 million tonnes in Q1 2020 y/y, according to the country steel industry association Ukrmetallurgprom. In Q1 2020, pig iron production dropped by 2.2% y/y to 5.1 million tonnes, steel pipes and tubes down by 25.4% y/y to 211.7k tonnes and pig iron dropped by 2.2% y/y to 5.1 million tonnes. However, rolled steel output was up by 1.8% y/y to 4.62 million mt. (17 April 2020)
  • Daily crude steel production in China increased by 6.5% from late March, reached 1.95 million tonnes per day over the period 1st April to 10th April, according to CISA. The rise in crude steel has also been reflected in the recent uptick in iron ore prices. (17 April 2020)
  • The Vietnam Steel Association (VSA)’s member companies registered a 15% fall in steel production in Q1 2020, reached 5.4 million tonnes. Steel exports fell by 38% y/y reached 300k tonnes, according to VSA. (13 April 2020)
  • Despite COVID-19, Tosyalı Holding announced on Wednesday to hire 1,000 workers at its new $1 billion steel plant in İskenderun, Turkey. (10 April 2020)
  • Despite the outbreak and falling oil prices, a new steel’ project will be launched in Q2 2020 in Almaty, Kazakhstan which will produce 100k tonnes of large-diameter steel pipes annually, according to Kazakhstan’s Ministry of Industry and Infrastructure Development. (10 April 2020)
  • Crude steel production in Japan is expected to fall by 25.9% to 19.36 million tonnes in Q2 2020 compared to 26.12 million tonnes the same period last year, according to the Ministry of the Economy, Trade and Industry (METI). (9 April 2020)
  • Mexican integrated steel producer AHMSA reduced its production due to COVID-19. (8 April 2020)
  • China daily crude steel output fell by 0.5% from March 11-20 to March 21-31, according to CISA. The productions also declined by 0.4% compared to the last year. (7 April 2020)
  • Evraz announced to lay off 230 workers from Portland steel plant in the US. (7 April 2020)
  • BlueScope Steel is to slow down the expansion of its North Star mill in Ohio, the US for a few months. The plan included the addition of 0.85 million tonnes of steelmaking capacity. The company is also going to cancel its share buyback (worth US$ 60.9 million) in response to the coronavirus pandemic. BlueScope already closed its operation in Malaysia, India and New Zealand. (7 April 2020)
  • Vallourec to slash 900 jobs (1/3 of the workforce) across North America. (6 April 2020)
  • Steel producers in Pakistan are seeking government incentives due to coronavirus outbreak. They requested for tax exemption, interests free loans, and to be allowed to operate during the lockdown. (6 April 2020)
  • The daily steel production at Khouzestan Steel plant in Iran reached a new high record of 13,104 tonnes/day on April 2nd. (6 April 2020)
  • In the UK, British Steel has paused production at its Skinningrove plant for three weeks as demand fell due to coronavirus. Sites at Lackenby and Darlington are not affected. (6 April 2020)
  • Turkish steel exports in the first three months of 2020 fell by 15.1% year-on-year, reached around $3.1 billion. In March 2020, its steel exports were about $980 million, declined by 24.4% from March 2019. (6 April 2020)
  • In India, Tata Steel has started reducing production at its various integrated steel facilities in Jamshedpur, Kalinganagar Angul (Tata Steel BSL) and Gamharia (Tata Steel Long Products). It halted its operations in the downstream facilities by putting them on care and maintenance mode. Its mining works have normally been operating. In the UK and the Netherlands, it has also reduced its production. Most Indian steel producers reduced/halted their production since India announced 21-days countrywide lockdown. (2 April 2020)
  • Kazakhstan has quarantined four cities including Karaganda from Monday to prevent the spreads of coronavirus. The largest steel mill in Kazakhstan which is owned by ArcelorMittal is located in Temirtau, Karaganda. (1 April 2020)
  • US Steel Kosice will operate at a reduced working time in April. The Slovakian plant will operate under the same condition as the last two months. It closed its blast furnaces in June 2019 and has been operating at a reduced working time since then. (1 April 2020)
  • Allegheny Technologies plans to idle its operations at its A&T Stainless joint venture in Pennsylvania, US, by the end of June. It has blamed Section 232 for the closures as ATI needed imported stainless steel from Indonesia as feedstock. (1 April 2020)
  • Turkey‘s Isdemir to temporarily stop operations in one of its blast furnace for repair works for 30 days. The BF can produce around 7,000 tonnes/day of hot metal production. (31 March 2020)
  • Sidenor to suspend its operations at its steelmaking units at its subsidiary, Viohalco, in Greece from 2nd April to 3rd May. The measure has been taken due to a slump in demand for construction materials and halted major state projects. (31 March 2020)
  • Malaysia started anti-dumping investigations into imports of coated flat steel products from China, South Korea and Vietnam, according to the Ministry of International Trade and Industry. The investigation is started following a petition from NS Bluescope Malaysia. (30 March 2020)
  • Japan leading steelmaker, JFE Holdings Inc, to slash its steel capacity by 13% by closing one of its blast furnaces by March 2024. It cited the reasons for the closure as weak demand and excess supply from China. Last month, Japan’s Nippon Steel Corp also announced a similar plan to cut its 10% production for the same reasons. (27 March 2020)
  • In the US, US Steel plans to idle its #4 BF at Gary Works in April for at least 48 days. (26 March 2020)
  • It is estimated that steel capacity utilisation is now dropped to around 35% in Indonesia. (26 March 2020)
  • In India, Tata Steel is shutting its downstream units in Maharashtra and Uttar Pradesh due to official states orders. India has now imposed a nationwide lockdown for 21 days to slow down the outbreak. (25 March 2020)
  • Vietnam has extended safeguard duties on imports of steel billet, rebar and wire rod until 2023. The colossal steel plant, Formosa Ha Tinh and Hoa Phat should be the most benefitted from these measures. The timing of the news is good for the local producers who are struggling due to the outbreak. (25 March 2020)
  • ArcelorMittal is going to idle its No#4 BF at its Indiana Harbor West integrated flat steel plant, in US, leaving only its No#7 BF operating in the plant. (25 March 2020)
  • Coronavirus has also hit the Vietnamese steel industry. The country steel production fell by 5.3% in the first two months of this year compared to the same period last year and reached 3.6 million tonnes. According to the Vietnam Steel Association (VSA), both steel sales and exports fell by 17.8% and 31% respectively in the first two months compared to the same period last year. (25 March 2020)
  • Gerdau has suspended its various operations in Argentina and Peru on Tuesday. While its operation in other countries such as in Brazil is affected by local disruptions and lockdown. (24 March 2020)
  • Global crude steel production declined by 7.2% in February compared to the previous month, reached 143.3 million tonnes. However, crude steel climbed by 2.8% compared to February 2019, according to the WSA. (24 March 2020)
  • In China, steel production is expected to rise in March indicated the preliminary released data. Steel inventory also reaching near 100 million tonnes, though demand has still not recovered yet due to lockdown measures across the country. The high inventory and low demand will likely to put more pressure on steel prices. (23 March 2020)
  • In the US, the Trump administration has designated steel and aluminium industries as “essential.” In the US, so far, major steel mills are operating normally with no plans of closures.
  • ArcelorMittal declared force majeure on raw materials contracts for its European steel mills due to the spread of coronavirus.
  • Tenaris plans to slash the workforce and reduce production across its operation in the US due to a combination of coronavirus epidemic and falling oil prices.
  • Steel producers in the Philippines have halted their production due to the lockdown.
  • ArcelorMittal is going to reduce production across Europe, including the closure of blast furnace in Spain and Italy. It has also postponed the restart of its Krakow blast furnace in Poland.
  • Crude steel production in China increased by 3.07% to reach 155 million tonnes in the January-February 2020, with a daily output of 2.58 million tonnes, according to the China Iron and Steel Association (CISA).

Demand 

  • Tata Steel needs £500 million in financial support from the UK government to cope with falling demand for its product as a result of the coronavirus lockdown. (27 April 2020)
  • The Indian Steel Association (ISA) has revised its finished steel demand growth forecast for the calendar year 2020, from 5.1% to – 7.7%, reaching 93.7 million tonnes. (21 April 2020)
  • As automakers shutdowns their operations, the tires companies have also decided to halt their operations. Hankook Tire, Kumho Tire and Nexen Tire decided to close their overseas plants temporarily. (17 April 2020)
  • Demand for speciality steel products to increase in China as nearly $397 billion of local government bonds are pledged for metal-intensive projects such as light railways, energy grids and 5G network rollout. (9 April 2020)
  • In the UK, new car registrations in March dropped by 44.4% on a year-on-year basis, according to SMMT. (6 April 2020)
  • Shell has pulled out from the LNG export plant, the Lake Charles, Louisiana facility in the US due to the crash in oil prices. (31 March 2020)
  • Apparent steel demand in Brazil is likely to drop by nearly 20% in 2020 compared to 2019 mainly due to the falling demand as a consequence of the coronavirus outbreak, according to the Brazilian steel institute, Instituto Aco Brasil. In April 2020, the institute anticipates that steel demand to fall by 50% y/y. (31 March 2020)
  • Global demand for stainless steel and special steel grades is expected to rise due to growing production of healthcare products such as ventilators, oxygen cylinders, hospital beds etc. The volumes will still be insignificant in the context of the total steel demand.  (31 March 2020)
  • Malaysia has extended the nationwide lockdown from 31st March to 14th April to controls the outbreak. (25 March 2020)
  • Toyota Motor to halt seven production lines at five plants in Japan from April 3 to cope with slowing global demand. (24 March 2020)
  • Bajaj Auto is also reported to have closed its plant in India. (24 March 2020)
  • In India, Mahindra & Mahindra announced to suspend its three manufacturing operations in Maharashtra. (23 March 2020)
  • Automakers in the US may be asked to make ventilators and other metal products to fight coronavirus. (23 March 2020)
  • Japanese automakers Toyota Motor, Honda Motor and Nissan Motor stated to cease production at their plants in North America. Toyota to stop operation in its vehicle assembly and auto parts plants in the US, Canada and Mexico for two days from 23rd March 2020. The aim is to disinfect its facilities from possible coronavirus.
  • The US automotive industry announced to halt its assembly plants, mainly under-pressured from union leaders. This should have some implications for the steel supply chain.
  • Most European automakers announced to halt production in the region including, Ford, Nissan, Renault and Volkswagen.
  • Tesla announced to cease its production at its factory in California, US.
  • Global automakers, including BMW, Toyota, Jaguar-Land Rover, Groupe PSA, and Volkswagen announced to cease production across major markets.
  • General Motors, Ford and Fiat Chrysler Automobiles announced a two-week shutdown of all plants in the US.

Prices, costs and raw materials

  • Despite weak demand, steel billets prices in some key markets such as South East Asia and Turkey are stable and rising owing to the shortage in scarp supply. (15 April 2020)
  • Steel trading in most markets remained quiet, and very little activity observed. In the short term, the overall price trend for most products is expected to be down due to bearish market sentiment. (6 April 2020)
  • It is reported that the US customs duties to be suspended for three months but companies may be liable for the tariffs at a later date. No additional details are available, particularly about tariffs suspension date. (30 March 2020)
  • In the US, the Coalition of American Metal Manufacturers and Users (CAMMU) last week urged the Trump administration to terminate the Section 232 steel & aluminium tariffs. The steel organisation further added that if the termination is not possible, then pause the tariffs for at least 90 days to support companies with cash flows. (30 March 2020)
  • Fortescue Metals Group (FMG) FMG would continue mining operations at the Pilbara mine besides implementing 14-days quarantine for all personnel entering Western Australia. (26 March 2020)
  • In China, steel futures closed higher on Wednesday on the Shanghai Futures Exchange. A positive sign so far. The construction steel rebar contract for October delivery up by 51 yuan to close at 3,365 yuan per tonne. The May 2020 contract for HRC was up 31 yuan to close at 3,314 yuan per tonne. (25 March 2020)
  • Thyssenkrupp, in Germany, to slash 3,000 jobs across its steel unit by 2026. (25 March 2020)
  • Rio Tinto announced to suspend operations for 21 days at its Richards Bay Minerals in South Africa, starting from midnight on Thursday. (24 March 2020)
  • Brazil’s Vale announced that it would continue its operations at its Malaysian iron ore terminal. Last week, it said that the operations might be temporarily suspended due to coronavirus. (23 March 2020)
  • Scrap prices are down in Asia due to the subdued demand and uncertainty.  (23 March 2020)
  • Cleveland-Cliffs has temporarily closed construction activities at its $700 million Hot Briquetted Iron (HBI) project site in Toledo, US, due to coronavirus pandemic.
  • In Taiwan, China Steel Corporation slashed most flat steel products prices for May delivery.

This page was last updated on the 5th of March 2020. Would you like any specific or latest updates please feel free to contact us at Research@commodityinside.com.