The UK steel industry can expect a less severe outcome from the second lockdown planned for England from Nov. 5, even as numbers of COVID-19 cases in the country soar, according to market sources.
Steelworks will continue to operate, and construction and manufacturing sites will remain open. However, the closure of car showrooms could again impact automotive output, which was hard hit in the first lockdown earlier this year, sources consulted by S&P Global Platts said.
"Industry has not been shut down so there should be no impact on sales," said a spokesman for Tata Steel Europe, owner of the major Port Talbot steelworks in Wales. "The latest changes do not affect us directly as we were already working in the safest way possible."
The new lockdown is for England only, as Wales has already entered a two-week lockdown due to end Nov. 9, Northern Ireland is in a month-long lockdown due to end Nov. 13 and Scotland introduced a 5-tier COVID-19 Alert level system on Nov. 2.
UK steel companies "will continue to operate throughout this second lockdown as well while adhering to strict COVID-19 workplace guidelines," said Gareth Stace, director general, UK Steel, the UK steel sector association. "As in March, the steel industry stands ready to do all it can to support the Government in what it needs in tackling this public health crisis ... whether this is the provision of skilled individuals, adapting production lines or prioritising the supply of specialist materials."
The sector operated safely during the first lockdown, ensuring its 30,000 workers were protected, Stace said. The industry typically produces 7.3 million mt of steel a year, around 65% of the UK's annual requirement.
As the second lockdown is planned to last just one month -- as opposed to nearly three months from late March to mid-June in the initial lockdown to combat the COVID-19 pandemic -- consumers are expected to postpone their spending plans rather than cancel them, according to an analysis published by the Financial Times.
Pierre Veyret, technical analyst at London-based broker ActivTrades echoed this sentiment, noting in a Nov. 3 bulletin that the rebounds in equity markets seen in Europe during the week may be an anticipation of the conclusion of the US Presidential election. They "may also be the sign that investors, after having already anticipated the latest lockdowns measures in Europe, now have their eyes toward the end of the crisis, just like happened in late March. Last week's sell-off has made share prices much more attractive for an investor who is already pricing the recovery," Veyret said.
Still, the National Institute of Economic and Social Research on Nov. 2 revised down its Q4 estimates for UK economic growth and now sees a 10.5% GDP contraction for the year, with a recovery to Q4 2019 levels only in 2023, on the basis of the impact of COVID-19 coupled with the prospect of a no-deal Brexit.
Source : https://www.spglobal.com/platts/en/market-insights/latest-news/metals