Steel prices have been on the downward trajectory in major markets around the world due to coronavirus disease 2019 (COVID-19). Steel prices started showing some resurgence in China but were short-lived. The overall Chinese market has started to improve, but it is still far away from where it should be.
In Asia, steel trading is currently thin, and there are not enough rooms left for negotiations. The falling steel inventory could cushion prices, though the subdued market sentiment discourages buyers from taking any position at this stage. The steel market is expected to be exacerbated further in the Muslim dominated countries in South East Asia, South Asia and the Middle East due to Ramadan, starting around 24th April.
With the epicentre of coronavirus has now shifted to Europe. Most EU members are now on the lockdown, and the consequences on the GDP would be serious for some markets. It is ascertained that just closing the schools in the UK could wipe around 3% from the UK GDP. The impact on the manufacturing and construction industry is difficult to calculate at this developing situation, though it would be quite adverse. Steel buyers are also holding back on purchasing due to uncertain market conditions and expectation of further fall in prices.
In the Americas, steel prices remained upbeat at the start of March, when the virus was not widespread. However, the situation has been evolved quite fast over the last few days, whereas a travel ban has been imposed amongst other initiatives taken by the US government. The Brazilian steel market is also likely to see prices falling in the coming weeks, partly due to the worsening situation in the US as well as the government measures to lock down the country. We expect Brazilian steel exports (particularly slab) to the US will be affected, and so the prices. However, Brazilian suppliers can be benefited from currency volatility to some extent, if the exports market remain accessible. However, shipping and transport disruptions are going to affect both the export and domestic markets in the region.
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