A couple of months into the global Covid-19 pandemic, the sell-off in steel markets appears to be abating.

In parts of Asia, where the outbreak first occurred, steel prices - including those for coated steels - have rebounded since late April. The same is true of the US market as well. As we detail in our Americas analysis this month, producers there have had success in their efforts to push through base price increases in recent weeks to reflect rising scrap costs.

In Europe, however, steelmakers have found themselves having to cut prices further since late April. As a result, margins on HDG above scrap have now slipped below €300 per tonne - a level similar to that seen in the immediate aftermath of the global financial crisis back in 2009 - although they are still some way from the lows seen during early 2016.

But while the dynamics of raw material costs appear to have provided some support to pricing in recent weeks, this may soon begin to erode. Scrap prices in general have held up recently due to issues surrounding the lower collection and generation of scrap. Those issues are now dissipating as business activity begins to pick up again.

With demand for steel still sharply down from early 2020 levels, particularly in Europe and the US, steelmakers in these regions may find it difficult to achieve further notable price increases above current levels. They appear to be aware of much, with renewed calls for more stringent trade measures emerging from producers in both Europe and the USA during recent weeks.

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