The profitability of the metallurgical sector is increasing

In 2020, the global steel industry has been hit by economic constraints related to the coronavirus, rising raw material prices and falling steel prices. Catastrophic financial results were recorded at enterprises in all regions.

Between May and August this year, profitability dropped to multi-year lows. However, they have risen sharply in the past few months, especially in the United States. This was driven by an increase in steel sales, not a decrease in the mill's operating costs.

Profitability was negatively impacted by the rising cost of raw materials. Iron ore prices have risen since May this year. The surge in demand from China has been the main driving force behind this growth following the lifting of restrictions related to coronavirus in that country. Iron ore prices have declined over the past month. However, prices are likely to remain high in the short term.

Coking coal prices have risen since the summer, when they fell to their lowest in four years. The boom in demand in China has not had the same impact on this raw material as it has on other steelmaking ingredients. Restrictions on coal imports to China have limited the rise in world prices. However, the rise in steel production in India, Europe and the United States should lead to further increases in the cost of selling coking coal in the coming months.

Scrap prices were on the rise until last month. They have stabilized or softened slightly since then and are likely to remain robust in the short term as steel demand and capacity utilization improve, especially in Western countries.

The profitability of factories in the EU and the US is expected to continue to improve in the last two months of 2020. Rising steel prices and relatively stable raw material costs will help steel producers in these regions return to profit margins similar to those seen in previous years. 2019. The Asian margin spread is likely to remain fairly stable for the rest of this year.