MEPS predicts 75 million tonnes shortfall in global steel production in 2020 due to the pandemic

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UK-based MEPS forecasts that global crude steel production will fall to 1.8 billion tonnes, in 2020. This equates to a reduction of 75 million tonnes, compared with the figure recorded in the previous year.

Early indications suggested that 2020 would be a year of modest economic recovery. Activity had been trending downwards since the zenith reached in the spring of 2018. Both governments and businesses had hoped that the start of the new decade would coincide with an upturn in economic growth. However, the coronavirus pandemic and subsequent lockdown measures have thwarted any such possibilities.

In Europe, the proliferation of Covid-19 and the substantial economic contraction is mirrored in the region’s steel output statistics. EU crude steel production decreased by 10 percent, year-on-year, in the first quarter of 2020. A reduction of almost 30 percent is predicted, in the April/June trimester. Output in this period is forecast at just over 30 million tonnes. This three-month total would be below the figure recorded in the first quarter of 2009 – the low point of the Great Recession.

North America is behind Europe in the timeline of the impact of the coronavirus outbreak. While the EU recorded a double-digit percentage reduction, North American crude steel output declined by only 3.6 percent, in the January/March period. A MEPS report predicts a decrease of more than 20 percent, year-on-year, in the second quarter of 2020.

Steel production remained high, in China, during the early months of this year. Output increased by 1.3 percent in the first quarter, compared with the corresponding period in 2019. The annual outturn of almost 1 billion tonnes is forecast to decrease only slightly, in 2020, from the figure recorded in the previous year. Growth in steel exports will be difficult to achieve. Consequently, robust domestic demand will be required to support Chinese steel production, in the medium term.

The prevalence of infections by the coronavirus and subsequent lockdown measures have varied in countries across East and South Asia. Nonetheless, local steel demand has been substantially negatively affected. Furthermore, exports of steel and steel-intensive goods are reducing. Consequently, output is being cut in the major steelmaking nations of Japan, South Korea, Taiwan and India.

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