The fall of the American steel industry has already become the most rapid since the 2008 financial crisis. U.S. Steel, ArcelorMittal and other major steelmakers are slashing production and staff in anticipation of further declining orders and falling prices, according to the Wall Street Journal.
According to the American Iron and Steel Institute, the capacity of steel mills in the United States, 56% are currently loaded, which is 80% less than 2019. At the same time, over the past three weeks, steel production in the country has decreased by a third. Hot-rolled steel prices on the spot market dropped by 18% over the month, to $ 485 /ton, and the drop compared to July 2018, when the record price was recorded, dropped by about 50%.
Analysts and top -Management of large steel companies predict a further drop in production volumes despite the gradual resumption of industrial enterprises. Credit Suisse estimates that distributors will have to sell off all the steel from their warehouses before new orders from consumers begin to arrive. According to Credit Suisse forecasts, demand will halve in the second quarter compared to the same period in 2019.
The rise in unemployment will have a negative impact, in particular, on household demand for cars and real estate, which, in turn, will hold back the recovery in demand for steel and steel products. A month of suspension of work in the US auto industry will cost the steel industry at least $ 1 billion in revenue, according to Metal Strategies.
Falling oil prices and reduced drilling operations also negatively affect sales of steelmakers. So, U.S. Steel closed its pipe mills in Texas and Ohio in March, thus cutting output by more than 60%.
The companies will likely have to revise their plans to increase production capacity. Thus, Nucor (SPB: NUE), Steel Dynamics (SPB: STLD), Big River Steel and other steelmakers planned to increase production capacity by 2021 by launching new electric steel-making furnaces by 8 million tons. This would correspond to a 10% increase in capacity from pre-pandemic levels.
Nucor and Big River told the newspaper that they have not changed their plans yet. Australia’s BlueScope Steel announced earlier this month that it was postponing its Ohio expansion.
Based on The Wall Street Journal