Magnified Non-Prime Steel Industry’s Struggles: Pandemic
Before the pandemic engulfed the whole economy, steel industry was already struggling as it grew only 3.4% in 2019, the pandemic has just worsened the scenario.
In the initial phase of 2020 between the month of January & March, the industry experienced a 1.4% decline in crude steel production, compared to the same period in 2019.
Most of the industries that require steel as raw product or otherwise were facing a decline in demand, causing a complex domino effect that’s seen the demand for steel slump. It’s a series of events no one saw coming.
All we know that Non-Prime steel is nothing but a by-product of Prime Steel production. If there is no prime steel production for the sectors, then there will be no surplus or over rolling steel, in short no Non-Prime Steel.
If the mills or manufacturers stop producing for the customers then there is no way Non-Prime industry can stay in the business for long as all the propagation is based on one simple fact, Prime Steel Production.
The demand for the Non-Prime steel still exists but the supply is no more, based on the basic economics one can figure out the impact of it in the current market scenarios.
The price has increased substantially as compared to Dec. 2019, from $478 (FOB China HRC Argus) to $ 612 in Dec. 2020 (FOB China HRC Argus)
So, what’s next? Despite its struggles, post lockdown with the ease in restrictions steel production is expected to increase. Majorly steel demand will depend on how well the construction, automotive and machinery industry will perform.