Metals: Steel supply high while demand weakens – ABN Amro

Now that stricter coronavirus measures have been introduced in Europe and the US, prices for iron ore and steel scrap have started to soften, as strategists at ABN Amro note.

Key quotes

“Even during the coronavirus crisis, steel mills still operated globally with output at high levels. However, with demand weakening amongst end users, steel inventories are piling up.”

“Due to the increased connectivity of global supply chains in the past years, disruption in supply and transport of raw materials is beginning to have an impact on business activity globally. (...) Prices in both Europe and the US started to decrease from 9 March.”

“While prices of iron ore and steel scrap decreased by 4-6%, coking coal prices gained 4%. Since market conditions have deteriorated swiftly, bearishness over steel market activity will persist and this will depress prices this year.”