Overseas
March 17, 2020
CRU: Covid-19 Hits Steel Demand in Europe as China Starts to Recover
Written by Paul Butterworth
By CRU Research Manager Paul Butterworth, from CRU’s Global Steel Trade Service
Activity in steel end-use sectors in China is recovering as per CRU’s base case, but evidence suggests that demand may start to run ahead of our base case in the near term. Encouraged by government stimulus measures, there is a lot of optimism of a quick resumption of demand. However, the government will also be keen not to allow fresh outbreaks of the virus, which may lead to constraints on any improvement. So, although steel prices have returned to pre-CNY levels and steel production has been higher than our forecast, steel inventories are still increasing and there is a danger that downstream inventories may also increase if consumption does not return sufficiently fast. This may ultimately force steel prices to fall and yield a pullback in production.
