CRU: How is Covid-19 Affecting China’s Steel Production and Exports?

By CRU Research Manager Paul Butterworth and Analyst Zhenzhen Jiang, from CRU’s Global Steel Trade Service

The loss of steel demand from Covid-19 has pushed Chinese steelmakers to either reduce utilization or idle capacity but, as steel stocks at mills reach critical levels, they will increasingly seek to offload in the export market. Decisions by mills will be dictated by the processes they are operating (EAF or BF/BOF), location of the mill and cost competitiveness, as well as more prosaic considerations such as physical space. EAF producers are most likely to idle capacity, possibly due to the flexibility of their operations, but more likely because scrap is simply not available as collection will be impacted by a lack of trucking capacity and workers. However, integrated mills will have less flexibility and are likely to be coming under more pressure to export steel or sell at low prices domestically to move material into trader stocks.