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“The UK’s backbone is made of steel. There can be no post-pandemic economic recovery without a strong and healthy steel industry.” Labour MP Stephen Kinnock, Secretary of Westminster’s Cross-Party Group on Steel.

With the steel industry having faced hardship in the past, it comes as no surprise that COVID-19 has completely disrupted the balance for the steel industry once again. With such fast-paced events and the magnitude of the coronavirus outbreak, it’s naturally been difficult for the industry to measure and assess the impact they’re facing.

These struggles can be seen through the Government loans given to help companies survive during this time. According to the Guardian Celsa Steel were the UK’s first in receiving the COVID-19 corporate bailout. The Government have said they are lending this money to Celsa Steel UK to enable the operation of the firm, securing more than 1,000 jobs in the process.

 

So, what have been the major implications to the steel industry during the COVID-19 pandemic?

The first major concern the steel industry faced during this outbreak was the reduced demand alongside the inability to supply what demand remained due to disruptions in haulage. This created a knock-on effect seeing companies struggle to pay wages or their own bills whilst demand for steel was so low.

  • Whilst coronavirus affected many industries across the world, companies looked to pass blame to their supply chains, meaning delays in payments and reduced orders being placed. With the steel industry being a foundation sector, they haven’t been able to pass blame onto their suppliers. They found limited wiggle room to reduce orders and output, with next to no flexibility to delay payments on their core inputs such as raw materials and energy. This inability to adapt to lower demand is also paired with the added restrictions to travel, shortage in truck drivers and the impact on EU-wide supply chains that are driving down demand. All of this is forcing the steel industry to increase their prices in order to stay afloat.

  • The last and most prevalent set back for the steel industry was the necessary safety measures that needed to be adhered to in order to control the virus. Many staff members were self-isolating when showing signs of COVID-19 or if they had come into contact with someone with symptoms. This was combined with the essential reduction in shifts to minimise personal contact and follow the 2m guidelines. All these important safety features left the steel industry with limitations on their production and sometimes halting production costing companies.

But what’s happening to the steel prices amidst this pandemic then?

With the implications from COVID-19 affecting the steel industry, it was undoubtedly going to affect the prices of steel going forward. A UK Steel Trading Company conducted their own research and compiled together these graphs highlighting the importance of increased prices, in order to keep the steel industry running throughout and even after the pandemic.

 

 

The graphs from the UK Steel Trading Company show the major troughs in the month of April with recovery starting straight after to remedy this. However, without the proposed rising prices of steel to combat the increasing prices of steelmaking ingredients, the industry could face serious repercussions. The steel industries main consumers, Automotive and Construction have now reopened and are operating within their new normal for their production lines. This should improve the steel industries outputs and help get it back on track. But without the increased prices of steel, it won’t be possible to keep the backbone of British manufacturing afloat for recovery.

 

Russell Wells – Co Founder & Director of CLD Fencing Systems said, “we are already feeling the impact of these production constraints across our industry, combined with a very weak sterling, it’s come as no surprise that many of our raw material suppliers are trying to apply increases. However, thanks to our huge stock holding and strong market position we are doing all we can to hold off these sudden increases, but it will catch up. Talk to our sales team today to find out how we can work with you to protect you and your clients from climbing costs hitting this sector.”

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