Challenges in global steel production

The global level of problems in ferrous metallurgy is clearly seen in the example of the largest transnational company ArcelorMittal, which has production in 20 countries in different regions of the world. The company's steel output in the past six months decreased by 25.7%, to 35.5 million tons, and in the second quarter - by 39.5%, to 14.4 million tons.

“The first six months of the year, and especially the second quarter, were one of the most difficult periods in the company's history, when steel demand dropped significantly as a result of the COVID-19 pandemic,” said Lakshmi Mittal, Chairman and CEO of ArcelorMittal.

The enterprises of the company did not do without thousandths of staff reductions, especially noticeable in the USA, South Africa and Italy.

The competitor that overtook ArcelorMittal in terms of production, the Chinese Baowu Steel Group, showed only a 5% decline in steel output in the first quarter. Moreover, she reported full compensation for these losses in the II quarter. And with the acquisition of new assets, the company is confident in the growth of production and its high profitability by the end of the year. Note that there are no reports of significant staff cuts at major Chinese steel mills.

But the Chinese situation is the very exception that only emphasizes the negative in the global situation. Excluding China, global steel production fell by 14.1% in the first half of the year. Especially at metallurgical plants that supply products for the automotive industry and other transport engineering.

At the same time, it is obvious that the Russian dynamics of metallurgical production (with a decline of 2.9% according to the WSA) turned out to be noticeably better than the world average. According to the publications of our Rosstat, the numbers are even better: in the first half of 2020, metallurgical enterprises of the Russian Federation produced 25.6 million tons of pig iron - 1.4% less than a year earlier. The output of finished rolled steel in 6 months increased by 0.2% year on year, to 30.8 million tons. However, production at the pipe enterprises of the Russian Federation decreased by 1.2%, to 6.1 million tons of pipes.

The largest production losses in the first half of the year among the leading metallurgical countries was received by India (-24.2%). Quite tangible (in the range of 15-20%) are the ferrous metallurgy of Japan, the USA, Germany and Brazil. This industry has experienced a similar decline in most of the EU countries, Mexico and Canada. And almost a record failure - in the ferrous metallurgy of South Africa (-49.4%) and Argentina (-36.6%).

Such indicators can hardly be called unexpected. At the peak of the problems, the production of a number of metallurgical plants was completely suspended, many blast furnaces were extinguished, etc. Moreover, the long-term consequences of the crisis for many countries are not entirely clear. For example, for India, where the COVID-19 epidemic is growing rapidly to date.