China’s flat steel prices have been feeling more keenly the impact of the COVID-19 than the long steel as many of the downstream industries have been hit hard and are hard to resume to normal operations than those for long steel, Mysteel Global understood from market sources on Tuesday.
The dampened demand for flat steel saw China’s national price of 4.75mm hot-rolled (HRC) coil decreased Yuan 51/MT on week to Yuan 3,488/MT as of March 24, being Yuan 153/MT lower than the national average HRB400 20mm rebar benchmark price, compared with the minus Yuan 5/MT price difference on January 23.
For example, “flat steel consumption in the auto industry has been seriously constrained so far with the persistent weakness in domestic auto industry, and it is getting worse with many global carmakers having been forced to suspend operations,” said an analyst from Shanghai-based Soochow Futures.
China’s auto sales and production over January-February slumped dramatically on year, with the sales down 42% and production down 45.8%, and for the first quarter, China’s auto production and sales are forecast to slump 45% on year, though the decline may narrow to 25% on year for the first half of 2020, as reported.
“With the deteriorating situation of the COVID-19 elsewhere in the world, many carmakers have halted their manufacturing plants one after another, posing a threat to further reduction in demand for flat steel,” said the Soochow analyst.
As of now, automakers such as Ford, Toyota, Citroen, Volkswagen and Opel, Tesla, and Peugeot have all announced to suspend their production in Europe and the U.S. amid the COVID-19 pandemic, according to company releases.
“Sales are poor and margins are really thin, (so) we have to halt one of our blast furnaces for maintenance for a while,” an official from a flat steel producer in Tangshan, North China’s Hebei admitted.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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