Market situation and outlook

The market

According to the World Steel Association, global crude steel production for the first three months of the year amounted to 443 (449) million tonnes, down 1.4% compared with the same period in 2019. Chinese steel production increased by more than 1% and steel production in North America decreased by 4%, whereas production in the EU-28 decreased by 10% compared with the same period in 2019.

In North America, the market for heavy plate weakened during the second half of the quarter. Both OEMs and distributors built up inventories somewhat after the destocking that marked the fourth quarter of 2019.

In Europe, demand during the first quarter was stable, albeit slowing toward the end of the quarter in the wake of decreased industrial activity, particularly in the Automotive segment, due to Covid-19. Both OEMs and distributors have increased their inventories during the quarter, partly as a result of destocking during the fourth quarter of 2019 and partly due to concerns about supply chains.

Demand for high-strength steel was stable during the first quarter, albeit demand in China was somewhat negatively affected because of Covid-19.

In North America, market prices for heavy plate fell during the second half of the first quarter. In Europe, market prices for both strip and heavy plate rose during the first quarter, but prices decreased in China.

Market outlook

Outlook

The industrial deceleration following the breakout of Covid-19 affects steel demand negatively. It is estimated that demand for high-strength steel will initially decrease somewhat less than demand for standard steel. From SSAB’s perspective, demand for high-strength steel is expected to also gain some support by our global presence from, among others, Asian markets, where a recovery can be noticed.

The outlook uncertainty is higher than normal for SSAB. It is estimated that shipments for SSAB Americas and SSAB Europe will contract sharply during the second quarter compared with the first quarter of 2020. Likewise for SSAB Special Steels, it is estimated that volumes will contract compared with the previous quarter, albeit to a somewhat lesser extent than for SSAB Americas and SSAB Europe.

Prices realized by SSAB Americas during the second quarter of 2020 are expected to be lower than in the first quarter of 2020. For SSAB Special Steels, prices are expected to be somewhat lower and for SSAB Europe, prices are expected to be more or less flat, compared to the first quarter of 2020.