The global steel industry has been affected by lockdowns related to COVID-19, and after a manufacturing recession in 2019, Q2 2020 does not look promising, the World Steel Association (WSA) said in a news release.
The manufacturing sector is projected to recover from the economic fallout of the pandemic faster than the supply chain sector because of the effects on the steel industry. However, the WSA noted that’s contingent on when lockdowns end whether countries bungle their exit strategies.
China has been the first country to see its economy grow since the pandemic began, with the country’s auto sector declining by 7.5pc in 2019, but rising by 45.8pc in January and February. The country’s mechanical engineering product output decreased by 28.2pc, while metal product output declined by 26.9pc during the first two months of 2020. China’s price margin index decreased to 35.7pc in February, then rose to 52 in March, indicating growth, All of the country’s steel sectors are expected to be up and running by the end of April.
Mechanical equipment is highly dependent on Chinese supply, using close to 15pc of the steel produced globally for capital goods in factories, the construction and medical industries, and more. Save for the medical sector, lockdowns are affecting its supply chain and have led to production cuts in countries like Thailand and South Korea. Recovery for this sector is expected to take a while because of the disrupted supply chain.
The automotive sectors in the EU and US comprise 20pc of global steel usage, but growth, which had already been negative in recent years, has suffered immensely because of the COVID-19 pandemic. The sector’s output declined by 5.9pc in 2019 and is anticipated to incur a steeper decline this year.
Europe recorded 1.4mn units of lost car production as of April 9, with the same trend expected in the US. The South Korean automobile industry suffered from a supply chain disruption when China went on lockdown. Japan is also slated for severe declines moving forward.
The WSA anticipates slow recovery in the auto sector post-pandemic because of supply chain complexities. However, bucking the trend, China’s industry is expected to recover better than other countries.