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China’s Early Recovery and a Forecast of World Steel Association during the Secondary Pandemic Waves

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by - 7/21/2020 362 Views

The World Steel Association (World Steel) predicts that steel demand will shrink by 6.4% this year



The World Steel Association (World Steel) predicts that steel demand will shrink by 6.4% this year due to the Covit-19 crisis and a 3.8% recovery in 2021. These figures are included in WSA's latest short-sighted view. World Steel expects demand to reach 1,654 million tons by 2020, with China recovering 6.7% faster than other parts of the world. Total demand in 2021 is expected to be 1,717 million tons.
 

China’s Early Recovery

World Steel says it expects China to cut global steel demand by 2020 and recover faster than the rest of the world. China's economic recovery began in late February, after being locked out more than other countries. With the exception of the hospitality and tourism sectors, its economy is fast approaching normalization. The deep freeze on economic activity in February reduced GDP by 6.8% and fixed asset investment by 16.1% in the first quarter. Industrial output fell 8.4%, with the automotive sector showing the worst decline in 44.6% in the first quarter.
 

Chinese Steel Demand on different Industries

The Chinese steel demand is expected to increase by 1.0% by 2020. We also expect the benefit of infrastructure projects launched in 2020 to meet and support steel demand by 2021. It will be driven by construction, especially infrastructure investment, as the government has put forward a number of new infrastructure initiatives. The Recovery might be comparatively lower in the manufacturing industry but the auto industry will get some support from stimulus measures.

The automotive and mechanical industries have been hit hardest by the crisis in the steel industry. Car manufacturing has already seen a shift to electric vehicles and government policies to reduce passenger traffic density in cities.
 

Secondary waves of the pandemic

World Steel predicts that in June and July the lockdown operations of most countries will continue to be relaxed, that social distancing controls will remain in place, and that major steel-producing economies will not be affected by significant secondary waves of pandemic. The steel industry has been hit by the corona virus outbreak, disrupting consumption, shutdown and supply chains. In most countries, especially in the second quarter, demand is expected to decline significantly, with the association saying consumption will slowly improve as the lockdown eases in the second half of the year.
 

Developed Economies

The Steel demand in developed economies is expected to fall by 17.1% by 2020. The European Union contracted by 5.6% in 2019 due to the continuing production recession. The manufacturing sector was plunged into a deep recession during the lockdown. The automotive sector is expected to suffer the worst.  In the United States, the manufacturing recession is expected to reach its peak in the second quarter. Japanese steel demand has been weakening since the second half of 2019, and is expected to shrink by double digits in 2020.

Category : Metal

Tags : World Steel Association, global steel demand, Chinese Steel Demand,


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