Insight
How will European steel and iron ore markets cope with coronavirus?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
European governments are attempting to limit the spread of Covid-19 by restricting movement. Therefore, many workplaces are reducing output or closing. Consumerism has declined and manufacturing – particularly in the automotive sector – has stalled. We will see a decline in European steel demand this year – but by how much? 80% of the European automotive industry is currently idle for two weeks. If the construction sector operates at 75% of expected output for that same period, demand will slide by just 1.8 million tonnes – barely 1% of the annual total. But we don't think a slowdown will be so brief. We currently factor in a one month go-slow. It could be longer. As demand falls, so too will production. And, unlike in China, we think production via the BF/BOF route will be hit hardest. This will exacerbate the impact of declines on steel-making raw materials such as iron ore and metallurgical coal.
Table of contents
- Executive Summary
- Overview
-
EU + UK steel demand to decline by 2% year-on-year in 2020
- Automotive sector already down
- Construction less clear
- Steel demand summary
-
Steel production to be hit harder than steel demand
- Hot metal production to bear the brunt of declines
- Trade and the poor outlook post-virus to exacerbate production declines
-
Raw materials to decline inline with hot metal production loses
- Iron ore
- Metallurgical coal
- Can steel markets survive?
- Methodology
Tables and charts
This report includes the following images and tables:
- Key forecast data in million tonnes
- Location of Italian steel makers by asset type. Over 80% of coronavirus cases diagnosed in Italy are in the regions north of Bologna (as of 19/3/2020)
- EU + UK crude steel and hot metal production forecast and iron ore and metallurgical coal demand forecast (Mt)
- EU+UK crude steel production forecast to decline this year
- Hot metal production declines are forecast to exceed crude steel declines
- Methodology behind the assumption that 80% of the EU + UK automotive industry is currently idled
- Forecast finished steel demand loss in the automotive sector assuming 80% production volume decrease for selected lengths of time
- Forecast finished steel demand loss in the construction sector assuming 25% reduction in activity for selected lengths of time
- Forecast finished steel demand loss from the automotive and construction sectors for selected lengths of time
- EU + UK crude steel, hot metal and raw material declines attributed to fall in domestic demand only for selected time durations
What's included
This report contains:
