Steel demand to fall in 2020 due to coronavirus

Global steel demand is expected to decline this year as coronavirus-related blockages and disruptions impacted industrial activity, in line with the latest Short-term Outlook from the World Steel Association (WSA), the international trade organization for the metals industry.

The WSA predicts a 6.4% decline in steel demand to 1,654 million tonnes in 2020 due to the coronavirus pandemic. The association, however, expects demand to recover next year and rise by 3.8% year on year to 1,717 million tonnes.

The 2020 outlook assumes that blockages in most countries continue to ease through June and July, and major steel economies are not suffering significant secondary waves from the virus outbreak.

A faster recovery in China than the rest of the world is expected to mitigate the expected decline in global steel demand this year. Demand in China, the world's largest steel consumer, is forecast to grow 1% in 2020.

The association predicts steel demand will decline significantly in most countries, especially in the second quarter, as the coronavirus shutdown and supply chain disruptions hurt consumption. Despite the lockdowns affecting all steel-consuming industries, in particular automotive and mechanical equipment, there is a sustained demand shock. The situation is forecast to improve with the easing of restrictions, which began in May, but the recovery path is likely to be slow.

Rebuilding in China to Ease Weaknesses Elsewhere

The WSA notes that a recovery in economic activity is expected in the third quarter of 2020, as most countries gradually resume operations from May 2010.

The economic recovery in China, which has spiraled out of the control of other countries, began in late February and is rapidly approaching normal. China's GDP contracted 6.8% year on year in the first quarter of 2020, for the first time in decades, as travel restrictions and quarantine measures hurt industrial production.

The WSA said that by the end of April, all major steel consumption sectors in China had returned to near full productivity. Steel demand in China is expected to recover in the second half of 2020, driven by the construction sector, which has already reached full productivity. Construction will be supported by infrastructure investment brought about by Beijing's new infrastructure. The auto industry is also expected to be supported by incentives. However, the recovery in China's manufacturing sector is expected to be slow due to the slowdown in the global economy.

Meanwhile, WSA