Covid-19 pandemic affects US steel demand and prices

Prices for flat products in the USA are decreasing. Although the US steel sector was viewed as a “critical industry” during the coronavirus pandemic, demand has deteriorated in the past few weeks.

Steel buyers receive significant discounts from domestic suppliers who are interested in securing orders. Material can be obtained in very short delivery times. Shareholders are trying to reduce their holdings given the current highly uncertain market conditions.

End-user sales are declining as production shrinks due to the massive Covid-19 pandemic in the United States. Requirements for rolls and sheets from car manufacturers and related suppliers have been particularly reduced. Investors are limiting capital injections into new projects.

The drop in demand leads to a significant reduction in production at domestic factories. Capacity utilization rates fell below 60 percent, the lowest levels since the 2008/9 financial crash.

US market participants point out that the rebound in domestic demand and steel prices will be directly related to how each state lifts existing restrictions and how companies embrace social distancing at the operational level.

A decline in prices for long products is expected. Currently
the supply of long products is more than sufficient to meet domestic demand. Customers are cautious in their purchasing decisions due to uncertainties about future economic conditions. Although consumption by the construction sector is slowing down, it remains one of the most efficient end-user sectors in the country.

Imports are unattractive as buyers fear that by the time they arrive at the port, domestic sales will fall below that of foreign materials. Domestic long steel prices are expected to fall in the near future following the April drop in scrap prices.

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