Key points of new virus affecting steel industry

The steel industry is a basic industry with a large economic scale, long industrial chain, and many related industries. Even without this epidemic, operations will be affected by multiple factors such as macroeconomics, financial markets, raw materials, and terminal demand. The complexity of the operation. Combined with the operation of the domestic steel industry in the previous stage, the impact of the epidemic on the global steel industry is mainly reflected in four aspects:


The first is “confidence.” The reason why “confidence” is given priority is determined by the characteristics of the deep financialization of the steel industry. In recent years, the steel industry has become more closely linked to financial markets, and prices have become more affected by futures.


The second is “demand.” At present, the world is learning to implement China’s epidemic prevention measures at different levels. The core is to press the “pause key” of people flow and logistics. The short-term decline in global steel industry demand is inevitable. At present, the short-term impact of the epidemic on the steel industry is gradually emerging. The key is to see how long the epidemic lasts. If the shortage of orders and supply chain “obstruction” continue for more than six months, the steel industry will face high production shutdown costs and cash pressure.


The third is “raw materials”. The main iron ore production area is not currently a heavy-hit area, so global commodity logistics, especially Haiyuan, is vital to the stability of the raw material supply in the steel industry. Under the epidemic situation, logistics may be restricted by the temporary control policies of some countries, and steel production companies need to consider the relevant impacts.


The fourth is “inventory.” In the case of short-term short-term demand, inventory has a greater impact on the industry, and it is easy to bring “bloody” damage to the operation of iron and steel enterprises, and timely adjustment of output according to market demand is the response.

Post time: Mar-31-2020