There is a rise in steel demand throughout the third quarter of 2020, and there are possibilities for another quarter of developments in the steel industry.
1. Severe drops across the globe since the pandemic started in early 2020
In the second quarter of 2020, many nations witnessed an unprecedented drop in steel demand. It was during the height of the first wave of coronavirus infections that caused several individual country PMI readings to fall to the lowest levels ever recorded. The most severe drop was in the IHS Markit India Manufacturing PMI which fell to just 27.4 in April. However, with the lifting of restrictions that allowed manufacturing activity resumed in the third quarter, global steel demand improved.
2. Significant recovery seen in steel demand
For most countries, the post-lockdown recovery in steel demand has been stronger than initially anticipated. Hence, there are considerable improvements during the third quarter in the PMI readings for many nations. Many returned above 50 which indicates an expanding economy. Several individual country PMIs even surpassed pre-pandemic figures, most notably Brazil. From the coronavirus-induced low point of 36.0 in April, the IHS Markit Brazil Manufacturing PMI rose to 66.7 in October.
In the first country to be hit by the pandemic – China, the resumption in activity started towards the end of the first quarter. The PMI falling below 50 was in only two months, February and April. It is the result of the quick suppression and control of the virus from the authorities. Also, the government also uses stimulus measures, which result in a relatively strong domestic economic recovery.
3. Steel scrap prices stay strong in the Asian market
Meanwhile, steel scrap prices in the Asian market trended up over the week of October 23-30. According to Mysteel’s latest survey, both domestic and imported scrap in many regions increased.
In China, the largest electric-arc-furnace steel-maker Shagang Group, raised its steel scrap buying prices by Yuan 50/ton (~$7.4/t) on October 24. It has attracted more deliveries to its plants.