New restrictions on European steel mills

Most of Europe's largest economies have entered a month-long mild isolation since this week to counter the ongoing second wave of the coronavirus pandemic.

The new restrictions are expected to affect end-user demand, but steel producers in any of the major European countries are not yet directly affected.

The authorities of Germany, Italy, France, Spain and the UK are imposing restrictions in their countries. However, they are keen to disrupt the economy as little as possible after the first blockages in March /April caused significant economic damage. Construction, manufacturing and industrial operations in general must continue.

The first blockages have halted some steelmaking and processing plants in Europe. This is not expected this time.

Last time, a number of steelmakers temporarily suspended their blast furnaces and steelmaking furnaces to bring production in line with demand. Since then, production has rebounded in line with demand, and the order books at steel and refineries seem strong enough to support production throughout November.

A northern European steel merchant said the new insulation is likely to be less stringent than the previous one as "... there seems to be a high level of Covid fatigue around." He added that the insulation “… this time will have less of an impact on scrap collection. However, despite this, we are still entering winter, which will affect Europe, but more strongly in the Baltic, which during the summer was an active exporter of scrap. "

Despite indications that the steel sector should not be hit directly by the constraints, uncertainty remains about future final demand. In southern Europe, for example, scrap dealers confirm that mills continue to purchase only the minimum quantities required to operate, avoiding any savings due to uncertainty.

In France, the first country in Europe to introduce soft insulation, overall steel demand remains strong. In Italy, on the other hand, the market has been extremely slow over the past two weeks as the country went on hold and waited for a lockdown. However, a serious shortage of flat products is supporting prices and demand in Italy.

In the steel sectors, construction activities will not be subject to the new restrictions. In fact, more and more public spending in European countries will be channeled into the sector to spur recovery. In terms of automotive demand, it could get a new boost.