In the world, steel is one of the most innovative and flexible alloys, customized for many requirements.
The variants of steel are used in housing, infrastructure, transportation, industrial, automobile etc. making it one of the world’s most versatile materials, one that can be recycled and reused easily.
The World Steel Association, in 2018, reported that the global steel output rose by 5.8% in a month — an increase that follows the growth of almost 13% in the same quarter one year ago.
However, the steel industry is bracing for more difficult times ahead as the coronavirus disease pandemic rages globally without any definitive sign of subsiding soon.
The preventive measures taking to contain the COVID-19 assault has forced almost all economies to a standstill. Also causing both the industrial and commercial activities to halt for several months.
In a special report released last week, Moody’s said, the unexpected virus pandemic is projected to bring about a global recession and exacerbates the already challenging operating environment for steelmakers around the world.
The broad macroeconomic weakness caused by the pandemic will further drive down demand for steel in core industries like manufacturing, automotive, construction and oil and gas exploration.
Various key customers of steel are struggling and according to Moody’s:
- Automotive is badly-hit this year, seeing sales plunge
- The Oil and Gas sector, another important consumer of steel for drilling and pipeline development, will experience industry contraction due to a plunge in oil prices and a dispute over production levels
- Construction and infrastructure activities are also likely to slow further with cancellations of projects on the horizon
- Global light vehicle sales will fall 14% this year, with US sales down at least 15%, Western Europe down 21%, Japan down 8%, and China down 10%
With China accounting for more than half the world’s total output for steel production, conditions in China set the tone for producers and consumers around the world.
“Companies are facing restrictions in logistics and transport, trades have been muted, prices of raw materials and steel have slid, which is causing the market’s value to decline.”
Also, the supply chain of raw materials for steel has been dramatically affected.
Like China, some other countries have its fair share of trouble due to the coronavirus pandemic crisis.
In Malaysia, according to the Malaysian Iron and Steel Industry Federation, the iron and steel industry is bracing a massive loss of more than RM3.2bil in revenue as a result of the shutdown imposed by the government.
In India, although India’s Ministry of Steel has directed steel mills to continue operations, Tata Steel – one of India’s largest steelmakers – had decided to shutter its downstream standalone units in the Maharashtra and Uttar Pradesh provinces alone.
However, recovery can only be seen later this year if the economic stimulus programmes imposed by various countries show impact.
“Steelmakers should appropriately adjust production schedules based on orders, finances and ability to transport materials,” said The China Iron & Steel Association.