International ratings agency Moody’s has announced that it has revised the outlook for the global steel industry to stable from negative on the back of strengthening demand and rising utilization and prices. The outlook reflects Moody’s expectations for operating conditions to improve over the next 12 to 18 months, barring a resurgence of the coronavirus.
“Demand for steel is improving on a resumption of production in important end markets and on stronger global economic data, particularly in China,” Carol Cowan, Moody’s senior vice president said.
Moody’s stated that, after pandemic-related shutdowns, production is ramping up in the automotive and industrial sectors. Meanwhile, the construction sector has remained resilient throughout the pandemic and even picked up in countries with infrastructure-focused stimulus programs, such as China.
In steelmakers’ key end markets, purchasing manager indexes (PMIs) are rising from low levels, with the US, the Euro zone and China now above 50, indicating expansion. While Moody's macroeconomic board forecasts a 4.6 percent contraction in G-20 economies in 2020, it expects 5.3 percent growth in 2021. Many important steel consuming regions will follow a similar pattern, with the exception of China, which will see GDP grow by 1.9 percent in 2020 and by 7.0 percent in 2021.
According to Moody’s, capacity utilization is improving but remains below pre-pandemic levels as the recovery lags in some regions and sectors.