The global long steel market is being severely impacted by the Covid-19 pandemic, which is having a negative effect on consumption and supply rates and making it very difficult to make predictions regarding when the situation will start to normalize. While the second quarter this year will be more about volume survival with prices to be kept on the low side, there is some hope for a rebound in the third quarter, according to the monthly report issued by IREPAS, the global association of producers and exporters of long steel products. Overall, the countries and regions will be affected at different levels, which might change the dynamics of steel demand and output separately.
While China has seen some recovery and pick-up of activity, the rest of the world is in the early or middle stage of lockdown, which affects simultaneously supply and demand. A lot of businesses have had to stop the production, some have lost orders and some are running at lower rates. At the same time, according to IREPAS, there is a certain lack of coordination in steel capacity stoppages and the same uncoordinated manner will be observed once the facilities start to resume production. For now, some regions may see supply shortages, while others may face oversupply and it will take time for these to balance out.
An unusual situation is seen in the raw materials sector with demand in some cases still being sufficient, while the supply is not enough to cover it and, with ferrous scrap availability being significantly lower as industry and trade has been grinding to a halt in the Western world.
In the longs markets, the situation is described by IREPAS as “clearly unstable” with the second quarter expected to be one of volume survival and developments in the third quarter to be largely defined by the coronavirus situation, with hardly any economic revival possible until we are past the virus crisis. In the second quarter, massive capacity reductions are expected in addition to the usual impact of the Easter and Ramadan periods and the uncertain development of the virus impact on the business activities. Overall, IREPAS expects the period of April-June to be a low point for the steel business both in terms of traded volumes and prices, and the main question is how long after that it will take to return to normality.