After the epidemic crisis, What are the downstream industries of Abrasives experiencing?

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On June 5, the world iron and Steel Association released the steel demand forecast results for the period 2020-2021. Novel coronavirus pneumonia epidemic in 2020 is forecast to shrink by 6.4% to 16.54 million tons in 2020. In 2021, global steel demand is expected to return to 1.717 billion tons, up 3.8% from 2020. China's recovery rate is expected to lead the rest of the world, which will ease the decline in global steel demand this year. It is inferred that the closure measures in most countries will continue to ease in June and July, social restrictions will continue to be implemented, and most steel producing countries will not be affected by the second wave of pandemic.

The latest manufacturing data released by Europe, the United States, the United Kingdom and other countries in recent days show that in May, with the restart of the economy in many countries, although the overall manufacturing industry is still in a downturn, the decline rate of the manufacturing industry has a significant slowdown trend. Economic activity is expected to recover in the third quarter as most countries have been gradually resuming economic activity since mid May.

Although all steel industries are affected by the closure measures, the mechanical equipment and automobile industries are at the highest risk of long-term demand shocks and global supply chain disruption. In order to follow the requirements of social distance, the production process of steel industry has been adjusted. Changes in the working environment may result in reduced productivity and longer production cycles.           

The construction industry, mechanical equipment industry and automobile industry, as the downstream terminal industries that use more abrasive products, are also affected to varying degrees, and will continue to face more severe challenges in the future.

Construction Industry             

During the outbreak, construction projects in some countries were suddenly shut down due to supply chain disruption and worker shortages. However, the decline in construction may not be as severe as it was during the global financial crisis. In the construction industry, the implementation of social distance measures seems more challenging, hindering the resumption of work. The outlook for new construction projects has also deteriorated as the balance sheets of consumers and businesses have deteriorated. The government may focus on new construction projects to support demand, but a significant deterioration in the government's balance sheet may limit the government's ability to invest in public infrastructure.

Mechanical Equipment Industry            

In the manufacturing industry, the mechanical equipment industry with the longest supply chain has experienced serious logistics bottlenecks and supply chain problems. At the same time, as investment projects are put on hold or cancelled, the demand for machinery and equipment will drop significantly in 2020. Due to the bleak investment outlook, the industry will face the challenge of demand recovery in the longer term. However, the recovery of industries such as agriculture and construction machinery will accelerate.

Automobile Industry            

In the steel industry, the automobile industry is the most serious victim of the epidemic crisis. In 2020, sales in the automotive industry are expected to decrease by another 20% over the past two years. It will take years to return to pre crisis levels due to revenue growth and telecommuting, but security concerns could boost passenger car demand in the short term. In addition, supply disruption may continue after the closure period is lifted, because liquidity problems will not only prevent automakers from restarting production, but also prevent auto parts suppliers from restarting production. The transition to electric vehicles will continue and may accelerate after the pandemic


On the whole, the dark time of the impact of the new epidemic on the global economy may have passed, but in the post epidemic era, various changes caused by the epidemic will have another sustained impact on the world economy. The recovery rate of the world economy is much slower than expected, and the abrasives industry will face the decline of the downstream market for a long time in the future The dilemma and challenge brought by shrinkage.

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