Steel prices to decline ahead of recovery in 2Q 2022 - S&P

Paul Bartholomew, senior editor at S&P Global Platts, predicts that steel prices will potentially decline before recovering in the second quarter of the next calendar year. He believes that the slowdown in steel production growth will affect iron ore prices in the first quarter. However, he hopes that tackling the semiconductor shortage could have a positive impact on steel prices in the US and Europe.

Bartholomew mentioned: “China has stopped producing aluminum and steel and is experiencing a copper shortage due to a lack of energy. However, many Asian countries find customers in countries they have not previously exported to, for example Vietnam exports to the US, India exports to Turkey, etc. China is probably still going to export about 68-70 million tons of steel to this year as it did in 2018, but I don't think China will suddenly start supplying a lot of steel and other metals to Asian markets, which is putting pressure on prices. ”
“However, there is no doubt that the slowdown in steel production will affect iron ore prices, and therefore we expect fairly stable iron ore prices in the first quarter of next year. As far as steel is concerned, there is now a very big difference between what you might call Western markets, Europe and the US and Eastern markets, China, India, etc. They are in a sense disconnected; “The easing of the semiconductor shortage could have a very positive effect on flat steel prices in the US and Europe because production has declined,” he said.

“Steel prices have risen so quickly and have reached record levels in many different markets. There comes a point where the end user or customer simply cannot deal with this ongoing price increase, so it's natural - a little pause. The US and Europe will continue to see upward momentum as the US infrastructure bill is signed, but not to the extent that we have seen in the past 12 months or so, ”he said.

“In China, things are a little different, because the big takeaway is that the demand for processing is very low - property consumption, production is now out of the boil, the infrastructure is still quite stable in terms of growth. There is no doubt that the Chinese government is satisfied with the slower and more robust growth, and they are not going to introduce incentives as much as they have done in the past. So anyone who expects China to suddenly take off again next year will have some kind of rude awakening, ”Bartholomew said.