With global steel producers responding to apparent demand challenges by reducing production aggressively, steel production is expected to drop further in April, according to KeyBanc Capital Markets. The statement comes in the wake of a data released by World Steel Association which reported a 6pc decline in global crude steel output at 147.1mn mt in March 2020, compared to March 2019.
The World Steel data revealed a decline in China’s production in March by 1.7pc to 79mn mt was a result of falling profits and steelmakers’ focus on liquidating inventories which were piled up during the COVID-19 outbreak.
However, BHP, a global resources company expects steel production to rise in China in 2020, given it manages a second wave of COVID-19 as predicted by health experts. In their nine months operational review released on April 21, the company said global weakness in demand could pressure flat product manufacturers in the country. EAC utilisations rates had declined to 12pc, which have recovered to 53pc. In fact, BHP estimates blast furnace utilisation rates to have increased to 79pc in April from 73pc in early 2020.
Production cuts in other regions
According to BHP, steelmakers across Europe, Americas, India and Japan have either announced plans to curtail production or have idled their plants in the June 2020 quarter due to demand shock. This, mainly on account of logistical difficulties, especially in India or on the back of plummeted demand in downstream demand, like the automotive sector in Europe. The effect of these production reductions is likely to reflect in the near term.