Nae Hee Han | Director, Economic StudiesWorld Steel Association30 June 2020

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The pandemicand the global steel industry

▌Disclaimer

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2

▌worldsteel – who we are

The World Steel Association (worldsteel) is a non-profit organisation.

It has headquarters in Brussels, Belgium. A second office in Beijing, China, opened in April 2006.

worldsteel represents steel producers, national and regional steel industry associations, and steel research institutes.

Members represent around 85% of global steel production.

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▌worldsteel – our key focus areasworldsteel is active in key areas of interest to the steel industry:

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Automotive Communications Construction Educationand training

Climate change and environment

Life cycle assessment

Safety and health

Raw materials Steel market analysis

Sustainability Technology

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The short-term impact of COVID-19 on steel demand

Source: IHS Markit

Short-lived forecasts, high uncertainty surrounding the COVID-19 pandemic

Assumption behind SRO: social distancing persists after reopening and no second wave

Lockdowns causing supply shock, demand shock, and financial shock

6

Unprecedented economic crisis due to COVID-19

0.0

5.0

10.0

15.0

20.0

25.0

UnitedStates

China Germany Italy Spain UnitedKingdom

Mexico Brazil

Unemployment, selected countries (%)

2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0World US Eurozone UK China Japan India Brazil Russia

Revision of GDP growth for 2020 (%)

Jan_15_2020 Mar_18_2021 Mar_26_2022 Apr_17_2020 May_15_2020

▌ Global overview

Mt = Million tonnes

2019 2020 (forecast) 2021 (forecast)

1,766.5 Mt 1,653.9 Mt 1,717.4 Mt

3.4%/ 1.3%* -6.4% 3.8%

7* World growth rates based on adjusted Chinese growth rates

Steel demand, finished steel (SRO May 2020)

Steel demand, finished steel (SRO May 2020)

▌ Regional overview

8

-5.6

-10.0

5.6

-4.0 -3.6

0.4

-2.3 -2.4

4.5 4.01.3

-15.8

-1.6

-10.3

-20.0-17.3

-9.4

-17.4-14.6

-11.2

1.0

-6.4

10.4 9.77.1 6.2

12.2

5.9

12.9

5.9

9.6

0.0

3.8

-25

-20

-15

-10

-5

0

5

10

15

European Union(28)

Other Europe CIS NAFTA Central & SouthAmerica

Africa Middle East Developed Asia Developing Asiaexcl. China

China World

% 2019* 2020 2021

2021 (Mt)

147.0 36.5 56.5 114.7 39.3 34.9 45.4 125.4 916.5 1 717.4195.2

*World growth rates based on adjusted Chinese growth rates

Steel demand, finished steel (SRO May 2020)

▌ Regional overview

9

Mt %2019 2020 2021 19/18 20/19 21/20

Developed 393.6 326.1 351.7 -3.8 -17.1 7.8

Emerging & Developing ex China 465.4 411.3 449.1 0.6 -11.6 9.2

db

201620172018201920202021

Austria3.8364.0954.1853.9803.4834.036

Belgium-Luxembourg4.3864.5574.6394.6394.3144.659

Czech Republic6.9007.2007.6007.2006.5306.810

Finland1.7061.9771.9601.7391.6171.747

France13.02414.12614.08213.80111.73012.669

Germany40.45441.00039.64834.89827.91831.268

Hungary2.5382.6592.7802.9592.7522.972

Italy23.70424.84425.28924.97720.48123.881

Netherlands4.0223.9814.8324.6823.9814.377

Poland13.14813.60114.89513.12211.77712.094

Slovak Republic2.2542.4382.5522.6032.4212.614

Slovenia1.0941.2431.3711.2521.1501.250

Spain12.57613.26013.83013.24011.25012.410

Sweden3.8734.1264.0633.8013.5353.818

United Kingdom10.88311.00310.82210.1897.6428.406

Rest of EU (28)13.71313.61315.00415.06312.56013.943

European Union (28)158.112163.724167.553158.146133.142146.954

European Union (15)124.361128.916129.734122.350101.252113.196

Turkey34.07735.92630.73525.99826.77829.268

Rest of Other Europe6.4836.4826.8017.7966.4807.215

Other Europe40.56042.40837.53633.79433.25836.483

Kazakhstan2.3152.6302.4982.6222.4382.633

Russia38.74940.86141.42243.49339.14341.688

Ukraine4.2454.5604.7444.7544.0414.526

Rest of CIS5.7426.3406.9957.9247.1077.610

CIS51.05254.39155.65858.79352.73056.456

Canada13.36114.04015.19013.08012.03412.996

Mexico25.48726.50925.59924.24220.67822.146

United States91.86197.72299.77597.65075.28179.545

NAFTA130.709138.271140.564134.972107.993114.688

Argentina4.2064.9204.8263.9192.8023.450

Brazil18.52019.52321.20720.78916.66418.566

Chile2.7602.8992.7142.6392.5012.522

Colombia3.6603.5503.6543.5752.7533.843

Peru3.2663.6594.0443.7753.4343.650

Venezuela0.7350.5110.1700.1190.1010.096

Rest of C & S America7.1027.1897.3957.6156.8197.212

Central & South America40.24842.25144.00942.43235.07439.339

Algeria5.6885.8135.4285.5825.0245.275

Egypt11.68310.17811.06710.3549.31910.250

Morocco2.8593.0312.9773.0362.6722.859

South Africa4.9704.7394.6674.4764.3254.368

Rest of Africa12.41010.79312.12212.96811.64312.181

Africa37.61034.55436.26036.41732.98234.934

Iran19.10519.95719.55818.49014.79216.567

Saudi Arabia12.20011.8348.6008.6527.0948.513

United Arab Emirates7.8337.9318.0308.3667.1328.283

Rest of the Middle East13.94513.44213.60613.14311.14711.993

Middle East53.08353.16449.79448.65140.16545.356

681.020773.840836.050907.460916.535916.535

China681.020773.840836.050907.460916.535916.535

India83.64388.68096.737101.48783.26495.754

Indonesia12.67313.59215.08215.94315.25716.264

Japan62.17064.38065.41063.20051.10054.600

Malaysia10.2569.4439.7769.2269.0699.368

Philippines9.6779.81910.7269.8479.0499.673

Singapore2.8322.7202.8912.3192.0002.300

South Korea57.07656.31353.71053.22346.47249.200

Taiwan, China18.27717.67217.85317.62316.70317.097

Thailand20.77719.03819.23518.42017.49917.586

Vietnam22.32821.63722.31224.32025.00125.826

Rest of Asia20.91720.70520.34923.64221.07622.985

Asia1,001.6461,097.8391,170.1311,246.7091,213.0251,237.189

Australia5.8495.4415.5005.4324.6174.964

New Zealand0.7560.7880.8150.8290.7050.757

Other Oceania0.3430.3260.2870.2950.2510.269

Oceania6.9486.5556.6026.5565.5735.990

Asia & Oceania1,008.5941,104.3941,176.7331,253.2651,218.5981,243.180

2.0003.0003.0004.000

World1,519.9681,633.1561,708.1061,766.4691,653.9411,717.389

World excl. China838.948859.316872.056859.009737.407800.855

BRIC821.932922.904995.4161,073.2291,055.6071,072.542

MENA72.56771.16268.14766.62856.50162.864

Developed Economies393.183405.304409.173393.576326.127351.722

Emerging & Developing Economies (world-advances)1,126.7851,227.8521,298.9331,372.8931,327.8141,365.667

Emerging & Developing Economies (world-advances) excl. China445.765454.012462.883465.433411.280449.133

0.6552.4281.483-1.496-14.1568.604

World excl. BRIC698.036710.253712.690693.240598.335644.847

Developing Asia858.974954.5671,027.9521,108.0051,094.5951,111.741

Developing Asia excl. China177.954180.727191.902200.545178.061195.206

ASEAN (5)75.71173.52977.13277.75575.87578.719

Developed Asia142.672143.272142.179138.704118.430125.449

Northern Europe84.29387.01286.43579.94966.05873.033

Southern Europe40.06741.90443.30042.40235.19440.162

Middle East excl. Iran33.97833.20730.23630.16125.37428.789

MENA excl. Iran53.46251.20548.58948.13841.70946.297

GCC24.62824.39221.00621.01817.42620.235

Sub-Saharan Africa excl. South Africa9.8948.7099.93910.6579.5919.975

World excl. China and EU680.836695.593704.503700.863604.264653.901

European Union (13)33.75234.80737.81835.79631.89133.758

The Pacific Alliance (excl. Mexico)9.68610.10810.4129.9908.68810.015

Mercosur23.96525.45426.85225.48120.15322.728

North Africa22.74621.10521.65521.28419.06620.591

Sub-Saharan Africa14.86413.44914.60615.13313.91614.343

presentation

Mt%

20192020202119/1820/1921/20

Developed393.6326.1351.7-3.8-17.17.8

Emerging & Developing ex China465.4411.3449.10.6-11.69.2

▌ Global financial crisis vs COVID-19 crisis

10

Crisis impact on sectors: 2009 vs 2020

-3.2

-23.8

-16.9

-3.9-1.3-6.3

-2.6

-19.6

-11.7

-6.1-5.6

-6.4

-25.0

-20.0

-15.0

-10.0

-5.0

0.020092020 (f)

Automotive

Construction

GDP

Investment

Mechanical machinery

Steeldemand

COVID-19 impact on GDP and investment larger than GFC, but impact on global steel use similar

The automotive sector hardest hit among steel using sectors followed by mechanical machinery

Comparison by sector

▌ Global financial crisis vs COVID-19 crisis

11

Impact milder than GFC, for advanced economies, but from a low level

Impact on steel demand for some emerging economies much severer, in particular India & MENA

Recovery will be slower for both developed and emerging than the post GFC era

Comparison by region

Crisis impact on steel demand: 2009 vs 2020Developed economies

%

09/08 10/09 20/19 21/20World -6.3 14.1 -6.4 3.8

Developed -33.3 24.9 -17.1 7.8

United States -39.8 34.9 -22.9 5.7

European Union (28) -35.0 20.9 -15.8 10.4

France -28.3 18.8 -15.0 8.0

Germany -33.4 28.5 -20.0 12.0

Italy -39.7 27.8 -18.0 16.6

Spain -34.0 10.0 -15.0 10.3

Japan -32.3 20.4 -19.1 6.8

South Korea -22.5 15.4 -12.7 5.9

GFC SRO May 20

%

09/08 10/09 20/19 21/20World -6.3 14.1 -6.4 3.8

China 23.4 6.6 1.0 0.0

Emerging & Developing excl. China -10.0 17.3 -11.6 9.2

India 12.5 12.2 -18.0 15.0

ASEAN (5) -7.9 17.2 -2.4 3.7

MENA 4.9 -1.4 -15.2 11.3

Russia -30.0 48.0 -10.0 6.5

Mexico -14.4 17.0 -14.7 7.1

Brazil -22.8 43.6 -19.8 11.4

GFC SRO May 20Crisis impact on steel demand: 2009 vs 2020Developing economies

db

201620172018201920202021

Austria3.8364.0954.1853.9803.4834.036

Belgium-Luxembourg4.3864.5574.6394.6394.3144.659

Czech Republic6.9007.2007.6007.2006.5306.810

Finland1.7061.9771.9601.7391.6171.747

France13.02414.12614.08213.80111.73012.669

Germany40.45441.00039.64834.89827.91831.268

Hungary2.5382.6592.7802.9592.7522.972

Italy23.70424.84425.28924.97720.48123.881

Netherlands4.0223.9814.8324.6823.9814.377

Poland13.14813.60114.89513.12211.77712.094

Slovak Republic2.2542.4382.5522.6032.4212.614

Slovenia1.0941.2431.3711.2521.1501.250

Spain12.57613.26013.83013.24011.25012.410

Sweden3.8734.1264.0633.8013.5353.818

United Kingdom10.88311.00310.82210.1897.6428.406

Rest of EU (28)13.71313.61315.00415.06312.56013.943

European Union (28)158.112163.724167.553158.146133.142146.954

European Union (15)124.361128.916129.734122.350101.252113.196

Turkey34.07735.92630.73525.99826.77829.268

Rest of Other Europe6.4836.4826.8017.7966.4807.215

Other Europe40.56042.40837.53633.79433.25836.483

Kazakhstan2.3152.6302.4982.6222.4382.633

Russia38.74940.86141.42243.49339.14341.688

Ukraine4.2454.5604.7444.7544.0414.526

Rest of CIS5.7426.3406.9957.9247.1077.610

CIS51.05254.39155.65858.79352.73056.456

Canada13.36114.04015.19013.08012.03412.996

Mexico25.48726.50925.59924.24220.67822.146

United States91.86197.72299.77597.65075.28179.545

NAFTA130.709138.271140.564134.972107.993114.688

Argentina4.2064.9204.8263.9192.8023.450

Brazil18.52019.52321.20720.78916.66418.566

Chile2.7602.8992.7142.6392.5012.522

Colombia3.6603.5503.6543.5752.7533.843

Peru3.2663.6594.0443.7753.4343.650

Venezuela0.7350.5110.1700.1190.1010.096

Rest of C & S America7.1027.1897.3957.6156.8197.212

Central & South America40.24842.25144.00942.43235.07439.339

Algeria5.6885.8135.4285.5825.0245.275

Egypt11.68310.17811.06710.3549.31910.250

Morocco2.8593.0312.9773.0362.6722.859

South Africa4.9704.7394.6674.4764.3254.368

Rest of Africa12.41010.79312.12212.96811.64312.181

Africa37.61034.55436.26036.41732.98234.934

Iran19.10519.95719.55818.49014.79216.567

Saudi Arabia12.20011.8348.6008.6527.0948.513

United Arab Emirates7.8337.9318.0308.3667.1328.283

Rest of the Middle East13.94513.44213.60613.14311.14711.993

Middle East53.08353.16449.79448.65140.16545.356

681.020773.840836.050907.460916.535916.535

China681.020773.840836.050907.460916.535916.535

India83.64388.68096.737101.48783.26495.754

Indonesia12.67313.59215.08215.94315.25716.264

Japan62.17064.38065.41063.20051.10054.600

Malaysia10.2569.4439.7769.2269.0699.368

Philippines9.6779.81910.7269.8479.0499.673

Singapore2.8322.7202.8912.3192.0002.300

South Korea57.07656.31353.71053.22346.47249.200

Taiwan, China18.27717.67217.85317.62316.70317.097

Thailand20.77719.03819.23518.42017.49917.586

Vietnam22.32821.63722.31224.32025.00125.826

Rest of Asia20.91720.70520.34923.64221.07622.985

Asia1,001.6461,097.8391,170.1311,246.7091,213.0251,237.189

Australia5.8495.4415.5005.4324.6174.964

New Zealand0.7560.7880.8150.8290.7050.757

Other Oceania0.3430.3260.2870.2950.2510.269

Oceania6.9486.5556.6026.5565.5735.990

Asia & Oceania1,008.5941,104.3941,176.7331,253.2651,218.5981,243.180

2.0003.0003.0004.000

World1,519.9681,633.1561,708.1061,766.4691,653.9411,717.389

World excl. China838.948859.316872.056859.009737.407800.855

BRIC821.932922.904995.4161,073.2291,055.6071,072.542

MENA72.56771.16268.14766.62856.50162.864

Developed Economies393.183405.304409.173393.576326.127351.722

Emerging & Developing Economies (world-advances)1,126.7851,227.8521,298.9331,372.8931,327.8141,365.667

Emerging & Developing Economies (world-advances) excl. China445.765454.012462.883465.433411.280449.133

0.6552.4281.483-1.496-14.1568.604

World excl. BRIC698.036710.253712.690693.240598.335644.847

Developing Asia858.974954.5671,027.9521,108.0051,094.5951,111.741

Developing Asia excl. China177.954180.727191.902200.545178.061195.206

ASEAN (5)75.71173.52977.13277.75575.87578.719

Developed Asia142.672143.272142.179138.704118.430125.449

Northern Europe84.29387.01286.43579.94966.05873.033

Southern Europe40.06741.90443.30042.40235.19440.162

Middle East excl. Iran33.97833.20730.23630.16125.37428.789

MENA excl. Iran53.46251.20548.58948.13841.70946.297

GCC24.62824.39221.00621.01817.42620.235

Sub-Saharan Africa excl. South Africa9.8948.7099.93910.6579.5919.975

World excl. China and EU680.836695.593704.503700.863604.264653.901

European Union (13)33.75234.80737.81835.79631.89133.758

The Pacific Alliance (excl. Mexico)9.68610.10810.4129.9908.68810.015

Mercosur23.96525.45426.85225.48120.15322.728

North Africa22.74621.10521.65521.28419.06620.591

Sub-Saharan Africa14.86413.44914.60615.13313.91614.343

presentation

%

GFCSRO May 20

09/0810/0920/1921/20

World-6.314.1-6.43.8

Developed-33.324.9-17.17.8

United States-39.834.9-22.95.7

European Union (28)-35.020.9-15.810.4

France-28.318.8-15.08.0

Germany-33.428.5-20.012.0

Italy-39.727.8-18.016.6

Spain-34.010.0-15.010.3

Japan-32.320.4-19.16.8

South Korea-22.515.4-12.75.9

db

201620172018201920202021

Austria3.8364.0954.1853.9803.4834.036

Belgium-Luxembourg4.3864.5574.6394.6394.3144.659

Czech Republic6.9007.2007.6007.2006.5306.810

Finland1.7061.9771.9601.7391.6171.747

France13.02414.12614.08213.80111.73012.669

Germany40.45441.00039.64834.89827.91831.268

Hungary2.5382.6592.7802.9592.7522.972

Italy23.70424.84425.28924.97720.48123.881

Netherlands4.0223.9814.8324.6823.9814.377

Poland13.14813.60114.89513.12211.77712.094

Slovak Republic2.2542.4382.5522.6032.4212.614

Slovenia1.0941.2431.3711.2521.1501.250

Spain12.57613.26013.83013.24011.25012.410

Sweden3.8734.1264.0633.8013.5353.818

United Kingdom10.88311.00310.82210.1897.6428.406

Rest of EU (28)13.71313.61315.00415.06312.56013.943

European Union (28)158.112163.724167.553158.146133.142146.954

European Union (15)124.361128.916129.734122.350101.252113.196

Turkey34.07735.92630.73525.99826.77829.268

Rest of Other Europe6.4836.4826.8017.7966.4807.215

Other Europe40.56042.40837.53633.79433.25836.483

Kazakhstan2.3152.6302.4982.6222.4382.633

Russia38.74940.86141.42243.49339.14341.688

Ukraine4.2454.5604.7444.7544.0414.526

Rest of CIS5.7426.3406.9957.9247.1077.610

CIS51.05254.39155.65858.79352.73056.456

Canada13.36114.04015.19013.08012.03412.996

Mexico25.48726.50925.59924.24220.67822.146

United States91.86197.72299.77597.65075.28179.545

NAFTA130.709138.271140.564134.972107.993114.688

Argentina4.2064.9204.8263.9192.8023.450

Brazil18.52019.52321.20720.78916.66418.566

Chile2.7602.8992.7142.6392.5012.522

Colombia3.6603.5503.6543.5752.7533.843

Peru3.2663.6594.0443.7753.4343.650

Venezuela0.7350.5110.1700.1190.1010.096

Rest of C & S America7.1027.1897.3957.6156.8197.212

Central & South America40.24842.25144.00942.43235.07439.339

Algeria5.6885.8135.4285.5825.0245.275

Egypt11.68310.17811.06710.3549.31910.250

Morocco2.8593.0312.9773.0362.6722.859

South Africa4.9704.7394.6674.4764.3254.368

Rest of Africa12.41010.79312.12212.96811.64312.181

Africa37.61034.55436.26036.41732.98234.934

Iran19.10519.95719.55818.49014.79216.567

Saudi Arabia12.20011.8348.6008.6527.0948.513

United Arab Emirates7.8337.9318.0308.3667.1328.283

Rest of the Middle East13.94513.44213.60613.14311.14711.993

Middle East53.08353.16449.79448.65140.16545.356

681.020773.840836.050907.460916.535916.535

China681.020773.840836.050907.460916.535916.535

India83.64388.68096.737101.48783.26495.754

Indonesia12.67313.59215.08215.94315.25716.264

Japan62.17064.38065.41063.20051.10054.600

Malaysia10.2569.4439.7769.2269.0699.368

Philippines9.6779.81910.7269.8479.0499.673

Singapore2.8322.7202.8912.3192.0002.300

South Korea57.07656.31353.71053.22346.47249.200

Taiwan, China18.27717.67217.85317.62316.70317.097

Thailand20.77719.03819.23518.42017.49917.586

Vietnam22.32821.63722.31224.32025.00125.826

Rest of Asia20.91720.70520.34923.64221.07622.985

Asia1,001.6461,097.8391,170.1311,246.7091,213.0251,237.189

Australia5.8495.4415.5005.4324.6174.964

New Zealand0.7560.7880.8150.8290.7050.757

Other Oceania0.3430.3260.2870.2950.2510.269

Oceania6.9486.5556.6026.5565.5735.990

Asia & Oceania1,008.5941,104.3941,176.7331,253.2651,218.5981,243.180

2.0003.0003.0004.000

World1,519.9681,633.1561,708.1061,766.4691,653.9411,717.389

World excl. China838.948859.316872.056859.009737.407800.855

BRIC821.932922.904995.4161,073.2291,055.6071,072.542

MENA72.56771.16268.14766.62856.50162.864

Developed Economies393.183405.304409.173393.576326.127351.722

Emerging & Developing Economies (world-advances)1,126.7851,227.8521,298.9331,372.8931,327.8141,365.667

Emerging & Developing Economies (world-advances) excl. China445.765454.012462.883465.433411.280449.133

0.6552.4281.483-1.496-14.1568.604

World excl. BRIC698.036710.253712.690693.240598.335644.847

Developing Asia858.974954.5671,027.9521,108.0051,094.5951,111.741

Developing Asia excl. China177.954180.727191.902200.545178.061195.206

ASEAN (5)75.71173.52977.13277.75575.87578.719

Developed Asia142.672143.272142.179138.704118.430125.449

Northern Europe84.29387.01286.43579.94966.05873.033

Southern Europe40.06741.90443.30042.40235.19440.162

Middle East excl. Iran33.97833.20730.23630.16125.37428.789

MENA excl. Iran53.46251.20548.58948.13841.70946.297

GCC24.62824.39221.00621.01817.42620.235

Sub-Saharan Africa excl. South Africa9.8948.7099.93910.6579.5919.975

World excl. China and EU680.836695.593704.503700.863604.264653.901

European Union (13)33.75234.80737.81835.79631.89133.758

The Pacific Alliance (excl. Mexico)9.68610.10810.4129.9908.68810.015

Mercosur23.96525.45426.85225.48120.15322.728

North Africa22.74621.10521.65521.28419.06620.591

Sub-Saharan Africa14.86413.44914.60615.13313.91614.343

presentation

%

GFCSRO May 20

09/0810/0920/1921/20

World-6.314.1-6.43.8

China23.46.61.00.0

Emerging & Developing excl. China-10.017.3-11.69.2

India12.512.2-18.015.0

ASEAN (5)-7.917.2-2.43.7

MENA4.9-1.4-15.211.3

Russia-30.048.0-10.06.5

Mexico-14.417.0-14.77.1

Brazil-22.843.6-19.811.4

▌ What will shape post-lockdown recovery?

12

Post-lockdown speed of recovery will be influenced by containment of the virus and government stimulus

Continued social distancing, damage to balance sheets, uncertainty will weigh on recovery

Potential drivers and impediments for economic recovery

Drivers Impediments

• Ease of establishing social distancing at workplaces and restoring value chain

• Potential bankruptcies• For some sectors, social distancing will be difficult to

practice

• Recovery of demand

• High unemployment• Cautious consumer behaviour with higher tendency for

savings• Slow recovery of demand for services, e.g. tourism• Low investment appetite due to uncertainty

• Government support and stimulus measures • Government budget constraint

• Restoration of confidence • Uncertainty about vaccine or cure availability• Uncertainty about post-pandemic changes

Steel demand to see a substantial decline in 2020; only a partial recovery expected in 2021

Both developed and developing countries are being hit hard

China’s role as crisis buffer much reduced this time, compared to GFC

Some emerging economies may fall back to a prolonged slump

High downside risk related to potential COVID-19 second wave. Strong government stimuli could bring a quicker recovery

▌ Summary

13

14

Beyond the pandemic

15

DriversMegatrends

Pre GFCPost GFC~ Pre COVID

19POST COVID 19

• Shift in international power

• Climate change

• Demographics• Technology• Social value

• Maturing globalisation

• China’s emergence and integration

• Rising middle class and urbanisation in emerging economies

• Aging population• Focus on

sustainability • Digitalisation

• Backlash against globalisation

• Rising inequality• Rising nationalism

and populism• Great decoupling• Weakening of

global institutions• Energy

transformation• Circular economy• Digitalisation

/automation

• De-globalisation? • Further drift between super powers• Growing economic rivalry?• Further polarisation of national

politics? • Deepening inequality or enhanced

welfare state?• New shape of urbanisation and

urban transportation?• Redefining the role of government

and society’s priorities• Stronger push for environmental

protection?• Acceleration of automation and

tele-activities

▌ Pandemic: portal to a new world, yet to be shaped

Globalisation was supported by open borders, internet technology

Forces against globalisation have been in force: saturation of globalisation benefits, rising economic nationalism

The pandemic brings further setbacks to globalisation, with global supply chain disruptions and nationalistic trade/investment measures

Deteriorating international relations further darken the future of globalisation

However, can the global economy do without existing global networks?

De-globalisation? Or, a different face of globalisation?

16

▌ What will happen to globalisation?

Deep scars from the pandemic will have lasting impact on economies Some sectors will take a long time to fully recover – a 90% economy Potentially lower growth due to efficiency and productivity loss Investment recovery will take time Widening inequality between and within countries Emerging economies likely struggle with stalled reforms Long term effect of the massive fiscal and monetary stimulus on inflation,

interest rate, investment yet to be seen Environmental protection could get boost from increasing social pressure and

green recovery programs. But, financing capacity? For some countries, climate change might lose policy priority

Oil prices will remain low17

▌ What will be the long term economic impact?

Business paradigm has to adjust to new normal - social distancing, teleworking, changes in consumer behavior and preferences

Some industries will face a very slow demand recovery, e.g. aviation and hospitality sector. New demand segments might be emerging.

Social distancing will undermine productivity and increase costs

Supply chain rearrangements and automation: reshoring or diversification?

Role of the state and industrial/trade policies might change

18

▌ How will business environment change?

Construction: changing demand for housing vs commercial buildings, new urbanisation patterns, weak investment, shift toward green energy

Auto: the largest victim of the pandemic. Likely experience further structural transformation post pandemic

Machinery: will suffer from slow investment, but boost from automation. GVC likely to go through realignments

19

▌ How will steel using sectors be affected?

2.7 1.9

-0.1

-3.9

-0.9

3.63.5

5.5

2.5

0.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2017 2018 2019 2020 2021

World(exclChina)

%

2.0 1.0

-3.7

-18.0

7.02.5 2.5

-4.0 -5.0

2.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

World(exclChina)

%

5.8

3.8

-0.8

-9.8

2.62.52.5

2.5

-0.5 -0.5

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

World(exclChina)

%

19Source: Oxford Economics, worldsteel Source: IHS Markit, worldsteel

Construction outlook (20-21) Automotive outlook (20-21) Mech. engineering outlook (20-21)

Source: IHS Markit, worldsteel

The COVID-19 pandemic will bring a far-reaching transformation of the world

The steel industry, like many other industries, will face a post pandemic structural transformation -shift in demand structure and operational environment

Exact shape of transformation: a work in progress…

New megatrends may offer additional challenges to the steel industry

Still, steel will be part of the solution and will also see new opportunities

▌ Conclusion

20

▌Presenter

Nae Hee Han

Director, Economic Studies

han@worldsteel.org

21

worldsteel.org | constructsteel.org | steeluniversity.org | worldautosteel.org | issf.org

22

Slide Number 1Disclaimerworldsteel – who we areworldsteel – our key focus areasSlide Number 5Slide Number 6Global overviewRegional overviewRegional overviewGlobal financial crisis vs COVID-19 crisisGlobal financial crisis vs COVID-19 crisisWhat will shape post-lockdown recovery?SummarySlide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Conclusion PresenterSlide Number 22