Will Steel Consumption Fall Below 50 Million Tons for the First Time in 11 Years?

Domestic Consumption of All Steel Products Including Auto Steel Sheets and Rebars Expected to Decline
Demand in Advanced Countries Like the US Also Projected to Drop by Up to 15%
Steel Industry Likely to Face Full Impact of COVID-19 Starting in Q2

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] This year, the annual domestic consumption of steel materials such as automotive steel sheets and rebar in South Korea is expected to fall below 50 million tons for the first time in 11 years. This is a direct result of the global automotive production and sales networks entering a 'shut down' state due to the COVID-19 pandemic.

According to the 'Impact of COVID-19 on the Steel Industry' report internally analyzed by the Korea Iron & Steel Association on the 17th, the annual domestic steel consumption this year is projected to drop to a minimum of 45.2 million tons.

If this trend continues, the annual production system of 50 million tons, which has been maintained since right after the global financial crisis in 2009, could collapse for the first time in 11 years. Domestic steel consumption peaked at 57.1 million tons in 2016, then decreased for four consecutive years to 56.3 million tons in 2017, 53.7 million tons in 2018, and 53.2 million tons last year, but remained around the 50 million ton level.

The predicted over 15% sharp decline in steel consumption this year is largely due to the economic downturn and the impact of COVID-19. According to the report, the steel industry expects a collapse of 10 million tons in rebar demand due to the housing construction slump, and demand for automotive sheet products such as cold-rolled and galvanized steel sheets is expected to decrease to the lowest levels. The shutdown situation in the global finished car industry is spreading to the steel industry.

The report assessed that the impact of COVID-19 would begin to take full effect from the second quarter. It explained, "In the first quarter, domestic demand decreased by about 10%, and as it continues to decline, the export impact will intensify from the second quarter, potentially causing the demand base to collapse due to the onslaught of low-priced imported steel."

As a result, concerns have grown that exports, which have maintained a support level of 30 million tons annually for nine years, could also collapse. The report forecasts steel export volumes this year to be between 25 million and 30.4 million tons.

A steel industry official said, "With front industries such as automotive, construction, and shipbuilding in recession, the industry had looked to exports as a breakthrough, but due to the sharp global demand drop caused by COVID-19, all steelmakers, not just blast furnace steelmakers, are expected to be adversely affected from the second quarter onward."

Meanwhile, according to the report, steel demand in the United States, India, South America, and the Middle East is also expected to decrease by more than 15% due to the COVID-19 situation. The European Union (EU) and South Korea are expected to see declines of over 10%, while China, Japan, and the Association of Southeast Asian Nations (ASEAN) are projected to experience about a 5% decrease.

This content was produced with the assistance of AI translation services.