Price and Demand Analysis for Steel – Q4 2020

                                                                                                                                                                            Source: Lucintel

Figure 1: Global Quarterly Steel Shipment and Price Trends

North America

Production of crude steel in the United States declined by 14% in Q4 2020, when compared to Q4 2019. However, US crude steel production increased by 8% in Q4 2020, as compared to Q3 2020. The construction industry experienced growth. In particular, housing starts in the US grew by 11% during Q4 2020 from Q3 2020. In addition to this, industrial activity has also begun to rebound, starting in July 2020, leading to recovery of steel demand.

Europe

In terms of the production of steel in the European region, data indicates an increase of 7% in Q4 2020, when compared to Q3 2020, and while it grew by 4% when compared to Q4 2019. In terms of prices, the European region registered an increase in the prices of crude steel during the Q4 2020 compared to Q3 2020.

In Q3 2020, the production of steel in the European region grew by 5% when compared to Q2 2020. In Q2 2020, more than 15 million tons of steel production capacity went offline in Europe during the market slump caused by the pandemic, which is more than any other region. Europe faced a greater impact based on steel demand for machinery and metal products, but the associated industries are beginning to bounce back.

APAC

In Q4 2020, production of crude steel in the Asian region grew by 8% compared to Q4 2019, while it declined by 2% when compared Q3 2020. Countries like China, India, and Japan, produced around 1,236 million metric tons of crude steel during 2020, which is 2.5% up from the year 2019. Among all the Asian countries, China has generated a significant increase in crude steel production of more than 25 million metric tons. This is an increase of ~10% compared to the end of Q4 2019. China's crude steel production has been running at a high level, bucking the trend of sluggish global demand as consumption was lifted by the country's infrastructure boom and underpinned by the manufacturing industry.

In Q3 2020, the market saw an increase in steel pricing. The recovery of production rates and normalization of inventory levels caused domestic steel prices in China to increase, reflecting improved operating conditions and higher raw material activity. China is demonstrating a powerful combination of increasing demand and effective government stimulus, which is propelling a quick recovery of steel demand in key end markets. China is operating with higher utilization and is also travelling rapidly through a V-shaped recovery phase after Q1 2020. The ongoing infrastructure spending, government stimuli, as well as increased steel production in May to September are the major factors that prevented the Chinese steel market from collapsing.