Asian steel trade not out of the woods in COVID fight

Asian steel market participants have seen another week pass without signs of light at the end of the tunnel in containing the coronavirus pandemic as countries across the region extend lockdown measures, with the exception of Vietnam.

China, which has provided some relief to the supply glut by importing steel recently, has started to show signs of its appetite easing as domestic prices soften.

Singapore, Indonesia, the Philippines and Malaysia - the first three key buyers of billet and rebar - have the highest number of COVID-19 infections in Southeast Asia and last week announced extensions to lockdowns.

This will mean even longer periods of standstill at construction sites including in Singapore, which has seen around 1,000 cases erupt daily at migrant worker dormitories, leading to the extension of its “circuit breaker” measures to June 1, the furthest date among Asian countries so far, in measures that would last 56 days.

In the Philippines, a second extension of measures has been implemented in Metro Manila and other parts of Luzon island, leading to a lockdown of 61 days.

Traders of billet and rebar said that they were now more focused on ensuring the execution of trades concluded earlier and processing requests to postpone shipments to May and June than rushing into new deals at a time when contractual performance may become questionable.

 “It’s difficult to say what the implications [of the extension] are right now, but as we see it, construction projects and steel production are still allowed to continue,” an Indonesian mill source said. “So I believe mill operations won’t change drastically from the current [state] and will continue at low levels.”