No early return to pre-pandemic levels, German steel recyclers fear

The Covid-19 crisis has had a dramatic impact on Germany’s crude steel industry, with corresponding consequences for the use of scrap, says steel recyclers body BDSV.

In the year to September, steel production was around 16% below the previous year’s level at 25.7 million tonnes. ‘For the year 2020, we expect the lowest crude steel production in Germany since the [2008] financial crisis,’ stated BDSV at its annual convention held online this week.

According to the organisation, there had been ‘clear signs’ of recovery in the third quarter. Crude steel production was back on track and all consumers were in the market after the summer holidays. However, half of the BDSV member companies surveyed do not expect the scrap market to return to levels before the coronavirus crisis until 2021.

A third of the companies foresee ‘a better business situation in 2021 than this year’ while around half expect the business situation to remain similar. The macroeconomic outlook is associated with many downside risks. Existing concerns such as the risk of a hard Brexit or a further escalation of the trade conflict between the USA and China have not gone away during the pandemic.

No mass job losses

Because Germany’s recycling sector was recognised as being ‘an essential’ sector from the very beginning of the current crisis, most businesses were able to continue operations and more or less survived. Short-time working was introduced by 56% of the steel scrap firms. Jobs were lost in 15% of the companies, says BDSV.

On top of Covid-19 related headaches, Germany’s steel scrap sector has been confronted with the rising cost of compliance with environmental regulations.