The novel coronavirus pneumonia was designated as a "global pandemic" by the WHO in March 11th, the second "global pandemic" identified since the 2009 H1N1 flu. The complexity and diversity of national governance and regions have brought many uncertainties to epidemic prevention and control, and the global steel industry is facing a more complex situation.

ron and steel industry in the "severe disaster area"

On March 14, 8 countries (see Table 1) have confirmed more than 2000 cases of new crown in the world, accounting for 91% of the total number of confirmed cases in the world, becoming the "major disaster area" of the epidemic, especially Europe has become the "epicenter" of the "pandemic". In 2019, the total GDP of these eight disaster areas is 47.8 trillion US dollars, accounting for 55% of the global total; the crude steel output is 1.808 billion tons (according to the world steel statistics, the latest data is 2018), accounting for 67% of the global total; the crude steel output of China, the United States, South Korea, Germany and Italy are respectively ranked 1, 4, 5, 7 and 10 in the world, accounting for 5 of the top 10, in the global steel supply system Occupy an important position.

Eight countries account for more than half of the world's economic scale and steel production, and the epidemic is bound to have a significant impact on the global economy and steel industry. The linkage between steel industry and economy can be considered from three aspects.

One is the correlation with the local economy, which can be simply observed by the ratio of apparent steel consumption to GDP (tons / 10000 US dollars). The larger the ratio, the greater the proportion of industry in economic activities, and the greater the impact of economic growth and decrease on steel. In 2019, the global value of this ratio is 0.2 (Note: the data for steel is 2018). These eight countries, China, Iran and South Korea, are significantly higher than the global level, 0.58, 0.44 and 0.33 respectively, with a strong correlation between local economy and steel; the other five countries have a low value, the United States and France only have a value of 0.05, which is related to the post industrialization period of European and American countries, the industry is mainly service industry, and the economic fluctuation has little impact on the steel industry, which can also be considered as a wave of steel industry The impact of the economy as a whole is small.

The second is the relationship with global trade, which can be observed by the scale of import and export. In 2018, the contribution of eight countries to global steel trade is 70%, including 40% for export and 30% for import. China's steel exports are 68.6 million tons, accounting for 15%, mainly in Southeast Asia and South Korea; South Korea's exports are also large, 30.1 million tons accounting for nearly 7%, and the steel imports and exports of China, Japan and South Korea are intertwined. The annual import volume of the United States is 31.7 million tons, which is highly dependent on overseas. The global steel trade of eight countries is intertwined, and the out of control epidemic situation is likely to have an adverse impact on the global steel trade, and it is difficult for the trading countries in the severely affected areas to be independent.

Third, the relevance with indirect import and export products. Some of the steel products are directly exported, and some of them are imported and exported through finished products, such as mechanical and electrical products, automobiles, household appliances and other steel products, which are important sources of external demand for the steel industry. According to the data of the World Steel Association in 2017, the indirect import and export scale of steel products in eight countries reached 270 million tons, including 169 million tons of indirect export scale and 100 million tons of indirect import scale. China, Germany, South Korea and other manufacturing industries are developed, with indirect exports of 136 million tons; the United States and Germany are the major indirect importers, with steel consumption of nearly 70 million tons. Affected by the epidemic, the steel industry in eight countries will have a significant impact on the global supply chain of automobile, machinery and many other industries.

On the whole, the iron and steel industry plays an important role in the global economy and supply chain system, and will "lead the whole body" affected by the epidemic!

The key points of the epidemic affecting the iron and steel industry

The iron and steel industry is a basic industry with large economic scale, long industrial chain and many related industries. Even without this epidemic, its operation will be affected by many factors, such as macro-economy, financial market, raw materials, terminal demand, etc. the epidemic situation has increased the complexity of the industry 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:

One is "confidence". The reason why "confidence" is put in the first place is determined by the characteristics of the deep financialization of the steel industry. In recent years, the iron and steel industry is more closely related to the financial market, and the price is more and more affected by futures. In 2019, the turnover of domestic iron ore futures was 19.87 trillion yuan, ranking first among domestic futures commodities, with a year-on-year growth of 72.39%, making it the largest commodity futures in China. The operation of the iron and steel industry needs stable market expectations, while the epidemic has frequently disturbed the global financial market, and the VIX has reached a new high, causing severe fluctuations in the global stock market and commodities. There is still great uncertainty in the follow-up trend, especially the strong linkage between European and American stock markets and domestic stock markets, while the European and American stock markets in eight countries account for a large proportion. The fluctuation of global financial market will affect bulk commodities, and then affect the price of raw materials and finished products required by steel enterprises, which brings prominent difficulties to the stable operation of the steel industry.

Second, demand. At present, China's epidemic prevention measures are being studied and implemented in different degrees all over the world. The core is to press the "pause" key of people flow and logistics. The short-term decline of global steel industry demand is inevitable. On the one hand, the impact of steel industry demand comes from the shrinking of orders, on the other hand, from the "obstruction" of related supply chain. According to the change of terminal demand of steel industry in the first two months in China, the impact is large, many of which are double-digit decline. According to the data of Industry Association and customs, from January to February, the production and sales of domestic automobiles were 2.05 million and 2.24 million respectively, with a year-on-year decrease of 46% and 42%, respectively, and the production and sales of new energy automobiles declined by a larger margin; the cumulative sales of domestic excavators were 192 thousand, with a year-on-year decrease of 37%, including 14700 domestic excavators, with a year-on-year decrease of 46.5%, and 4555 export excavators, with a year-on-year increase of 48% (this shows that the foreign demand in the previous two months or in The total volume of foreign trade import and export was 4.12 trillion yuan, down 9.6%, and the export showed a double-digit decline in February. In terms of supply chain, the global spread of the epidemic will also have a wide impact on the global steel industry supply chain. Taking the automobile supply chain as an example, the global characteristics of the supply chain are obvious, and it is mainly distributed in the eight severely affected countries. According to the report of Evergrande Research Institute, China, South Korea, Italy, Japan, France, Germany and the United States are important auto parts producing countries. Affected by the epidemic, the total export volume of passenger cars and auto parts of the seven countries may be reduced by US $32.8 billion and US $19.5 billion respectively. At present, the short-term impact of the epidemic on the iron and steel industry is gradually emerging. The key is to see the duration of the epidemic. If the order shortage and supply chain "obstruction" continue for more than half a year, the iron and steel industry will face high production capacity shutdown costs and cash pressure.

Third, raw materials. The main iron ore production area is not a "disaster area" at present, so the global bulk commodity logistics, especially Haiyuan, is very important for the stability of raw material supply in the steel industry. A report from McKinsey in February predicted that the impact of the epidemic on global logistics could continue until the end of this year. Under the epidemic situation, the logistics may be restricted by the temporary control policies of some countries, so the steel production enterprises need to consider the relevant impact. Affected by the epidemic, the global iron and steel production will decline. If calculated according to the lower range of 3% of pig iron production, the global iron consumption will be reduced by about 50 million tons.

Fourth, "inventory". In the case of short-term demand is not smooth, inventory has a great impact on the industry, which is easy to bring "bleeding" damage to the operation of iron and steel enterprises. At present, the domestic social inventory and steel plant inventory have reached a historical high, and the utilization rate of electric furnace steelmaking capacity has remained at a low level. In terms of the proportion of converter and electric furnace in eight countries, the proportion of electric furnace steelmaking in Italy, Iran, Spain, the United States and other four countries is more than 50%, and the elastic space of capacity utilization is larger, while that in China, South Korea and France is smaller. In the future, with the recovery of domestic economic activities, inventory digestion will be accelerated, but the steel industry in other countries may face the same inventory problem.

On March 9, the United Nations Conference on Trade and development said the new epidemic would reduce global GDP by $2 trillion. According to the ratio of global apparent consumption of steel to GDP 0.20, the consumption reduction of steel corresponding to US $2 trillion will be 40 million tons. In view of the fact that the coefficient of the main impact areas of the epidemic exceeds the global average, the consumption reduction of steel will be more than 40 million tons.

Confidence will come mainly from China!

At present, the time of the end of the epidemic is still uncertain. On March 13, Zeng Guang, a member of the high-level expert group of the National Health Commission, said: "the global epidemic should end longer than in June, and when it ends depends on the prevention and control situation of various countries. It is impossible to judge the end time of the domestic epidemic, and no country can take the lead in ending the epidemic without the world. " In this context, the epidemic is still increasing concerns about global economic growth expectations, which some agencies expect to be the lowest level since the global financial crisis in 2008.

China has the world's largest manufacturing industry and the world's longest and most complete industrial chain. With the resumption of domestic production and the return of the economy to normal, coupled with more relaxed fiscal policy and more flexible monetary policy, as well as the combined boost of traditional infrastructure and new infrastructure demand, the Chinese steel industry with more than half of the global crude steel production will play an important role, The demand pressure and supply chain challenges of the global steel industry will be gradually alleviated, and corresponding countermeasures will be explored to cope with the challenges of the epidemic, enhance the confidence of the global steel industry, help the global steel industry out of the impact of the epidemic and return to normal operation.

Two Italian steel companies stop production

Alfa acciai's production of its 1 million ton long timber asset in Brescia ceased at 10 p.m. on March 10. Acciaieriedi Sicilia, another group asset, is understood to be unaffected so far.

"The spread of the coronavirus and the decision of the competent authorities in this regard have affected the maintenance of normal production and commercial procedures for several days," another parent material manufacturer, Ferrera valsabbia, issued a formal notice According to the statement, the factory was shut down at 10 p.m. on March 11. The company can produce 900000 tons of long timber.

Tata Steel Europe will cut 1250 jobs to reverse the downturn

Henrik Adam, chief executive of Tata Steel Europe, said in an internal memo that it plans to cut 1250 jobs in the face of a "challenging environment" and "an urgent need to improve profitability.". "We are under a lot of financial pressure and the top priority is to improve our performance and cash flow," Adam said in the memo

Tata Steel said it would not replace its retired or former employees except for layoffs, which will be less than half of the cuts announced last year.

Under the influence of the epidemic, the price of iron making in Tokyo will be reduced by 6% - 11%

Novel coronavirus, the Japanese iron and steel producer TokyoSteelManufacturingCoLtd, said in March 16th that the demand for steel market was weak and the company would reduce its price of all steel by about 6%~11% in April. The price cut is the company's first in six months.

Bar prices, including rebar, will be cut by 11.3%, H-beam by 8.4%, hot-dip galvanized coil by 5.5%, and channel steel by 11.1%.

Stainless steel contract price adjustment in March will be postponed and order acceptance will be reduced

Novel coronavirus infection is difficult to see in the Japanese market. It decided to postpone the adjustment of the domestic contract price of the nickel alloy stainless steel cold rolled sheet, medium plate and chromium stainless steel cold rolled sheet in March. At the same time, in order to maintain the market environment and optimize the inventory level, it is decided to reduce the order receiving of Ni series stainless steel cold-rolled sheet by more than 30%, or even about 50% according to the situation; if necessary, the order receiving of CR series stainless steel cold-rolled sheet will also be adjusted.