Oct 15, 2020
COVID-19 Impact on Flat Steel in Chemical and Materials Industry
- Chemical and Materials
- Oct 15, 2020
COVID-19 Impact on Flat Steel in Chemical and Materials Industry
Flat steel products are the type of the steel which are in the form of sheets and plates. Flat steel products incorporate rolled or slabs that are a semi-finished steel commodity. In industries such as automotive, household furniture, shipbuilding and construction, flat steel products have a wide variety of applications and uses.
Flat steel products are of different types which are hot rolled sheets, cold rolled sheets, coated sheets and plates. Availability of different types of flat steel products increases their uses in the building and construction of the commercial building and residential.
The demand of the hot rolled sheets are more in the automobiles, construction, agricultural equipment, and machinery as the steel have the more strength which can help to increase the life span of the building and the equipment in different industries.
Cold rolled sheets are more used in the domestic appliances products which are manufactured in different industries under several processes. Cold rolled sheets are can be molded and pressed in any form according to the requirement of the products. Coated sheets are the type of the flat sheets which are coated with different material which as aluminum or zinc which enhances the anticorrosion properties of steel product.
Flat steel plates are being manufactured in different length and breadth according to the specific product such as in manufacturing of the industrial machine. Flat steel products can be cut in any shapes and manufactured in any dimension due to which application of the flat steel sheets products increases in automotive and construction industry.
IMPACT OF COVID-19 ON FLAT STEEL MARKET
The pandemic have hit the economy very hard word wide as the lockdown was imposed in all the regions which have made the situation challenging for all sector for growth and also the developing actives will be done in the stager manner. COVID-19 have also effected the import and export of the flat steel products across all the regions due to which the demand of the flat steel have decline. The demand of the flat steel have decline by 15%-17% in the COVID-19 period.
The COVID-19 has affected all sectors due to which the demand of the several products in the global as well as in the domestic market has fallen down. The pandemic have resulted in the slow growth in all the sectors as the industries have been impacted by the COVID-19 situation. Government and the other higher authorities have taken the steps for the control of the spread of the COVID-19 which have been started form China and spread in all over the word.
The government has done the lock down in the countries due to which production in the industries and other manufacturing sectors have fallen down. Also on the other had the demand of the finished products have also fallen down due to the lower earning of the disposable income at lower group.
With the spread Coronavirus which was originated in China has started impacting ongoing building and construction projects due to which the demand of the flat steel products have fallen down. With the increasing number of Coronavirus cases in the different countries engineers and workers are not reporting at manufacturing industries of steel products due to which the production of the flat steel have fallen down in the COVID-19 period.
COVID-19 have resulted in the halt in the automotive, construction industry as due to the lockdown most of the industries which used more of the flat steel products are running at half of our usual working run rate due to which demand of the flat steel products have fallen down and manufactures have to face losses during the pandemic situation. The demand of the flat steel products for the production of the domestic appliances products have fallen down by approximately 53% during the COVID-19.
The demand of the flat steel has fallen down in all the regions due to the COVID-19. As the demand-supply imbalance can also be felt in Japan, South Korea, India, and the U.S. worsens due to the pandemic situation. The manufactures of the flat steel products have to face losses to the lowering demand in different sectors.
China local flat steel demand has reduced drastically in Q1 of 2020 due to which the manufactures were not able to sale of the inventories. The carrying cost, maintaining cost of the flat steel products have been increased by 30% during the COVIED-19 which has resulted in the lower revenue for the manufactures.
The demand of the of the home appliances finished goods have fallen during the COVID-19 by approx. by 45% due to which the demand of the flat steel sheets in the manufacturing industry have fallen down. The large industry have resulted in less demand of the new machinery due which demand of the flat steel which are used in the manufacturing of the industrial machinery have fallen down during the pandemic situation. Most of the flat steel sheets producing regions or countries are facing the decline in crude steel output due to production cuts amidst ongoing increase during the lockdown period in COVID-19.
China will move faster towards normalization of economic activity for the different sectors which will increase the demand of the flat steel products and will increases the import for the flat steel for the production of the finished goods after COVID-19 crisis.
With the increase in the government regulation for the infrastructure, the demand of the flat steel products such as hot rolled sheets and cold rolled sheets will be increased in the building and construction industry. Automobile manufacturers are investing money in the market and also with the increase in the demand for the transportation vehicles and cars will increase the demand for the flat steel in the global market.
IMPACT ON CONSTRUCTION INDUSTRY
Steel products are largely used in the construction industry as steel provide the strength to the structure of the building. Flat steel sheets have several applications in the building and construction industry. Hot rolled sheets are available for the different applications but due to the COVID-19 situation several construction projects have been put on hold in different regions due to which the demand of the flat steel products have fallen down in the construction industry.
COVID-19 has brought the prolonged disruptions and uncertainty in the construction industry which made the sector under pressure and resulted in slow growth and standstill of the sector due to which the growth of the flat steel in the construction have fallen down.
With increasing government regulations for the lockdown in the countries lead to the closure of the government undertakings, school, collages, hospitals and several other governments undertaking due to which the demand of infrastructure development was not arise and which leads to lower demand of flat steel products.
- In European countries, most of the companies re-started their construction work and started taking new projects, due to which the construction activity increases with the rate of 27.9% after the pandemic period.
- In May 2020, The construction activities in Europe has been rises by 21.2 % compared with the month of April but as compare to previous year the number is fallen by 10.3%.
- In May 2020, 38% of construction project owners halting projects underway in March which also resulted in 10% cancelling projects altogether.
- In April 2020, more than 31% construction cancelled or halted all over the world. Around 16% of respondents have already announced cancellations for projects expected to begin in May and June.
- In March 2020, Boston state shut down all construction sites and other areas in Massachusetts areas due to increasing suit of construction delays.
IMPACT ON AUTOMOBILE INDUSTRY
In automobile sector the use of the flat steel is done in manufacturing of the spare parts and the engine equipment and other exterior steel design products. The automotive sector have faced the decline due to which the demand of the flat steel decline by 70% in all the regions and the production have also on halt due to the lockdown in all the countries during COVID-19. The manufacturing of the new models have been stopped due to which the demand for the flat steel have decline in the automotive industry.
The flat steel used in automotive industry in:
- In the body construction, frames, doors and trunk openings, 40% flat steel is used for high-strength and energy recovery in case of a collision.
- 23% flat steel, made of cast iron for the engine block and machinable carbon steel for the wear-resistant gears, is in the drive train.
- Using rolled high-strength steel strips, 12% flat steel is in the suspension.
- In the wheels, tires, fuel tank, steering and breaking mechanisms, the remainder is contained.
European automotive sector have faced unexpected crises as BMW and Volkswagen concentrated on their new products instead and European Automobile Manufacturers’ Association (ACEA) has already declared provisional plant closures due to the fall of demand of automobile in the region, supply shortages due to supply chain disruptions with other regions.
Society of Indian Automobile Manufacturers (SIAM) also declares that the auto industry will result in estimated loss of USD 23,000 Million losses per day due to lockdown due to which demand of the flat steel in the automotive industry have fallen down. Manufactures also result in delayed launch of new products and auto expo.
- The delay in the launch of BMW X1 facelift electronic car which was planned in March in India.
- ETAuto got delayed or postponed due to the Coronavirus crisis and the lockdown uncertainties.
- Mercedes-Benz EQC 400 electric SUV delayed its launch due to the spread of Coronavirus.
- General Motors is delaying the upcoming reveal of the new all-electric Hummer truck because of the COVID-19 pandemic.
- The delay in the launch of Volkswagen T-Roc electronic car which was planned in March in India.
IMPACT ON STEEL INDUSTRY AND FLUCTUATION IN THE STEEL PRICE
Steel industry also playing an important role in the flat steel global market as lots of tons of steel and other metals are used in the construction activities and application. COVID-19 has also impacted his demand of the steel products in all the regions.
In the U.S. steel plants, their manufacturing practices have to be changed to prevent increasing inventories and dropping steel commodity rates resulting in lower revenue generation. As demand of the steel is declining, integrated steelmaker in the U.S. steel manufacture has decided to idle blast furnaces and cut production of steel.
According to the Vietnam Steel Association (VSA), Japan's steel production is projected to decrease by 25.9%, while VSA-related companies reported a 15% decrease in steel production and a 38% decrease in steel exports in Q1 2020. COVID -19 have adversely affected the steel prices as the demand of the steel has fallen down as lockdown in several industries.
FIGURE 1 STEEL PRICE (2020) (USD DOLLAR/TON)
IMPACT ON LABOR FORCE
Large projects are running delay due to the lower availability of workforce in the countries due to which manufactures have to face cost escalation and heavy penalties in further delays of project. Workforce in the construction industry have voluntary step back to come to the construction so to stop the increase of Coronavirus in the country.
With increasing COVID-19 the manufactures are not able to produce according to the capacity as production resulted in 40%-45% of total production in past. With the increasing lockdown period in different countries lower class labor have more from one place to another and not able to find the work As larger industries production was on halt due to which works a have lost the job and several companies have increases the lay off as started running in losses.
Company US Steel announced the over 1,400 layoffs due to idling machines at their plants. The London based International Steel and Mining Corporation Keetac has confirmed plans to lay off 230 employees from its Portland steel factory. For the production of the flat steel, skilled labor is required for the production of the sheets and plates which are used in the automotive and building and construction industry.
STEEL COMPANIES RECENT DEVELOPMENT DURING COVID-19
- Liberty Steel Georgetown in the U.S. is closed for past three months as Coronavirus pandemic reduced demand for its products.
- On 20 April 2020, due to reduced demand for steel in the automotive and construction industries, Nippon Steel Corp announced the temporary closure of its third blast furnace (BF) in Japan in mid-May.
- On 10 April 2020, Kazakhstan company will produce 100k tones of large-diameter steel pipes annually after the COVID-19.
- Portland steel plant announced to lay off 230 workers in the U.S.
- Ukraine company steel production fell by 3.4% to 5.32 million tons in Q1 2020.
- According to the World Steel Association world crude steel production declined by 6% in March 2020 which reached 147.1 million tones.
- In the U.K., British Steel company has paused production at its Skinningrove plant for three weeks as demand fell due to Coronavirus.
The COVID-19 crisis has created the pandemic situation widely which affected the growth of the flat steel market as the demand in the building and construction, automotive activities have fallen down in all over the world.
As, the government imposed lockdown rules for all the manufacturing and construction activity and sites which resulted in halt of flat steel manufactures which lead to the huge loss for both the country and manufacturers and will slow show a steady growth in coming years.
Most of the construction labor already headed to their homes or villages and doing other work and they are not willing to return and resume their construction work again which causes the shortage of skilled labors in urban areas due to which large projects are running out of time due to which the demand of the flat steel in the construction industry have fallen down.
The lowering demand in the automotive sector because of COVID-19 has resulted in the decline in the demand of the flat steel products in the automotive sector.
The impact of the halt in work has increases the direct bearing of losses on the company revenues, jobs and project delays. The second largest employment providers in the world, after the manufacturing, infrastructure and real estate segments, have been affected by the lockout imposed because of the virus breakout.
Government has also taken many steps for the upliftment of the flat steel industry. Companies are also taking the strategic steps towards the growth of the Government has also initiating the construction projects which will increases the demand of the flat steel in all the regions.
Most of the countries are importing flat steel products from China and other countries and due to the restriction in the export and import of goods from one country to another is widely impacting the construction activities. With the increase in government initiatives and increases workforce in the in industry will help to increases the market growth in future.