Coronavirus is threatening to bring down the global steel market
a Temporary drop in production and demand for steel in China due to the outbreak and associated restrictions may lead to an increase in steel production in other areas and increased stocks, which could reduce the world price of steel.
In S&P Global Platts forecast that world steel prices could fall after the fall of iron ore prices by 8% on Tuesday.
"the Concentration of the virus in China, after strong growth of Chinese production and exports of steel in 2003 is likely to create a vacuum of demand in the region," - noted analysts at Jefferies, the Australian Simon Tecra and Abraham Acres. "We believe that the steel stocks in the world are likely to increase and compensate the fall in steel production in China, which will impact on world steel prices".
According to them, steel prices are likely to fall more rapidly than the prices of iron ore.
China is the world's largest producer of steel, smelt 996,3 million tons of steel in 2019, which is 8.3% more than in 2018, and account for 53.3% of world production, and this percentage is growing, reported on Monday, the world steel Association.
He is also the world's largest consumer of iron ore, absorbing more than half of shipping supplies. S&P Global key Platts assessed the 62 percent iron ore index at the level of 84,70 USD (CFR North China), which is 8% lower than in the previous assessment of the market last Friday, in respect of concerns about the impact of the virus.
Tuesday ports in the province of Hebei, a major Chinese steel node was closed, which made it difficult as iron ore imports and steel exports, and many towns postponed the resumption of construction until further notice.
"This is an indicator of reduced risk of infection, but it also has a negative impact on steel demand," said a Chinese trader.
Some large factories in the North of China, including Hesteel Group, Anshan I&S and Shougang Group, scheduled maintenance of blast furnaces in February. The South Korean source said that production cuts may help the Chinese enterprises to maintain steel prices.