Steel production: impacted by Covid-19 pandemic

Steel production: impacted by Covid-19 pandemic

World Jan-July steel output drop narrows to 5.3 pc

The decline narrowed from the 6 per cent year on year drop in the first half year of 2020 thanks to higher output in July, according to the latest World Steel Association (WSA) report

October 2020

Global crude steel production contracted 5.3 per cent year on year to about 1.03 billion tonnes during the period January to July 2020, indicating the lingering impact of Covid-19 pandemic.

The decline, however, narrowed from the 6 per cent year on year drop in the first half year of 2020 thanks to higher output in July, according to the latest World Steel Association (WSA) report.

For July, crude steel output of 64 countries reporting to WSA slipped 2.5 per cent year on year to 152.7 million tonnes, recovering from the 148.7 million tonnes in June, according to WSA data. The WSA noted that due to the ongoing Covid-19, many of the figures for July were estimates that may be revised with next production update.

Crude steel production from China — the world’s biggest steel producer — shot up in July to an all-time high on robust domestic demand, buoyed by government investment in infrastructure.

According to the WSA, production in China, which now accounts for more than 60 per cent of the global steel output, spiked 9.1 per cent year on year to 93.4 million tonnes in July. For the first seven months of 2020, output rose 2.8 per cent year on year to roughly 593.2 million tonnes.

Among the other major Asian producers, India saw a 24.6 per cent decline in production to 7.2 million tonnes in July, the fifth consecutive month of decline. Disruptions due to the coronavirus crisis are hurting domestic steel demand.

Production in Japan also dropped 27.9 per cent to 6 million tonnes in the reported month. Steel makers in the country have been hit by weak demand from the manufacturing sector amid the virus crisis. Crude steel output in South Korea also fell 8.3 per cent to 5.5 million tonnes. Consolidated output rose 2.3 per cent to 116.5 million tonnes in Asia.

In North America, crude steel production slumped 29.4 per cent to 5.2 million tonnes in the US in July. Output in Canada dropped 24.5 per cent to around 0.8 million tonnes while in Mexico it fell 22.6 per cent to roughly 1.2 million tonnes in July. Overall production in North America tumbled 28 per cent to roughly 7.2 million tonnes.

In the Europe Union (EU), production from Germany, the biggest producer in the region, went down 24.7 per cent to 2.4 million tonnes. Output fell 11.2 per cent in Italy to roughly 1.8 million tonnes. France also saw a 34.5 per cent slump to 0.9 million tonnes while output dropped 31.6 per cent in Spain to around 0.6 million tonnes. Total output was down 24.4 per cent in the EU to around 9.8 million tonnes.

Soft demand in automotive and construction is hurting steel producers in Europe. Lower demand has forced steel producers in Europe to cut their capacity to adapt to the challenging situation.

The WSA sees steel demand in the EU to contract 15.8 per cent this year. The manufacturing sector in the EU was expected to rebound in 2020 following a recession in 2019. However, it has been pushed into a deeper recession amid lockdowns that led to a significant decline in orders. The trade body expects the automotive sector in the region to be the worst hit.

Moreover, output in the Middle East edged down 0.8 per cent to 3.2 million tonnes in July. Iran, the top producer in the region, saw a 14.4 per cent rise to roughly 2.3 million tonnes. Africa recorded a 12 per cent decline to around 0.9 million tonnes in July.

Among other notable producers, output from Turkey went up 7.4 per cent to 3.1 million tonnes. Production from Brazil, the largest producer in South America, rose 3.5 per cent to roughly 2.6 million tonnes.

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