Global metal major ArcelorMittal expects Chinese steel demand in 2020 fall to about 1 percent, down from an estimated 3.2 percent in 2019.
The Lakshi Mittal-owned conglomerate sees impact of robust real estate activity dampened by impact of the coronavirus on Chinese demand and the knock-on impact elsewhere.
Despite such short term factors, ArcelorMittal expects steel demand to decline as infrastructure spending has been front-loaded and real estate demand structurally weakens due to lower levels of rural-urban migration.
“If this does not coincide with renewed capacity closures, this is expected to have a negative impact on steel prices and spreads,” the company said in its just released annual report for 2019.
Excess capacity and oversupply in the steel industry and in the iron ore mining industry have in the past and may continue in the future to weigh on the profitability of steel producers, including ArcelorMittal.
“While the iron ore supply/demand balance has been more favorable more recently and iron ore prices have been strong in 2019, no assurance can be given that it will not deteriorate again, particularly if Chinese steel demand declines or worldwide capacity increases due to new construction or the restart of production,” it said in the annual report.
The US-China phase one trade deal led to improved market sentiment, which resulted in industrial restocking.
The Chinese government also continued to ease liquidity conditions moderately, as a tool to simulate the economy supporting an improved hot rolled coil spread, reaching $190-200 by the end of 2019 and sustained into January.
Denne historien er fra March 2020-utgaven av Steel Insights.
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Denne historien er fra March 2020-utgaven av Steel Insights.
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