Since the beginning of 2020, the price of China's steel market has been on an upward trend. According to market feedback, steel prices will continue to rise this year. First of all, let’s look at a set of data. Let’s take the largest rebar storage warehouse in Hebei as an example. As of the end of November last year, the inventory at that time was only 12,000 tons. Compared with the time when the maximum inventory exceeded 150,000 tons, this figure is the lowest within this six years. According to data from China Steel Iron and Steel Association, in November 2019, rebar stocks in 20 cities across China fell by more than 20% month-on-month, was the lowest since 2013. At the same time, the total inventory of the national steel market was 9.87 million tons, a month-on-month decrease of 15.9%, a record lowest in the past two years. As everyone knows , with the spread of Covid-19, various industries have ceased production. Judging from the reserves at that time and the market demand after the resumption of production this year, it is obviously not enough. The price increase of the steel industry is logical thing.
With the spread of Covid-19 in European and American countries, it also has impact on the local steel market. After a long period of sluggish demand, the European and American steel markets have achieved a sustained rebound in the near future. Due to the slow progress of the resumption of work in the early stage, it is difficult for the steel mills to raise prices to be followed up by the market, and the pace of resumption of production at the production side is also quite cautious. However, from July this year, the prices of various types of steel products in Europe and North America have steadily increased by 5-10 Euros/ton, and the market orders have increased significantly. The reason is the increase in demand and the sharp drop in market inventories. In addition, the lack of low-cost imported resources has also boosted market confidence to a certain extent. However, the recovery in demand seems to be limited to the construction industry. The automotive industry just needs to perform generally, and the resistance of cold products to rise is greater.
The United States is still troubled by the epidemic so far. Despite weak spot demand, steel mills still insist on high-level quotations. Taking medium and heavy plates as an example, leading steel mills are quoting at $600-620/ton, so flat steel prices in the US continue to rise. Take medium and heavy plates as an example. Since hitting a low of US$563/short ton in early June, it has risen by US$50/short ton. Under these conditions, U.S. Steel decided to restart the No. 6 blast furnace at the Gary plant in Indiana and the No. 1 blast furnace at Pennsylvania.
Cold heading steel
As the Southeast Asian Iron and Steel Association stated in an online conference in the past few months,it is expected that the steel consumption of the six ASEAN countries will drop by 2.1% in 2020 to 79.3 million tons. Among them, due to the stagnation of construction activities during the Covid-19 pandemic, the Philippines' demand fell the most, reaching 8.1%. The decline in the country's billet imports also affected the total billet imports in the ASEAN region. Malaysia’s steel demand is expected to fall by 8% and Thailand’s 6.6%. At the same time, the Southeast Asia Steel Association has given positive expectations for the steel consumption in Vietnam and Indonesia. It is estimated that the steel consumption of the two countries will increase by 4% and 3% respectively in 2020. According to data from the World Bank, Vietnam is the only country among the six ASEAN countries that is expected to achieve a GDP growth of 2.8% in 2020. The country’s strong demand for hot-rolled coils has supported steel mills in India, the Commonwealth of Independent States and even Turkey. SEAISI Secretary-General Yeoh Wee Jin concluded: "Covid-19 has had a significant impact on the ASEAN economies, and steel demand in the region is expected to recover in a V-shaped pattern by 2021.
The global steel industry has kept gradually recovering, but the sequelae caused by Covid-19 are still there, and there are many industries that require steel. Steel is needed for construction, automobile, machinery manufacturing, hardware and other industries. As far as the current situation is concerned, the rise in steel prices will continue for a long time.