In 2022, steel prices will fall for a long time. However, due to frequent geopolitical events and tight supply chains, the market as a whole is very volatile.
Raw steel prices rose sharply earlier in the year, rising more than 12% between January and February. China’s efforts to combat climate change have sent iron ore futures tumbling as the country’s steel industry accounts for nearly 15% of China’s total carbon emissions. Meanwhile, Mexico’s steel industry has returned to pre-pandemic production levels.
Scrap sales performed particularly well in the first quarter as U.S. steel companies invested more in scrap processing. But by February, prices began to fall again, especially for HRC. Meanwhile, Japan and the United States reached an agreement in April allowing Japan to ship 1.25 million tons of steel duty-free each year.
In March, prices rose again, this time by 4.9%. At that time, the growth was mainly due to rising wafer prices. However, HRC has declined steadily, down nearly 47% from October 2020 levels.
The steel price index rose sharply again in the second quarter, rising more than 15% in April. By then it will be clear that the war in Ukraine will not end quickly, and steel prices will react accordingly. Soon after, Ukrainian production slowed and Russian goods came under sanctions. This forced pig iron buyers to seek sources outside of Ukraine and Russia to compensate for supply shortages.
As the energy crisis in Europe worsened, this affected European prices for housing and communal services. Then, in May, the steel index fell sharply again. Iron ore prices fell to a 4-month low due to the coronavirus lockdown in China. Meanwhile, ArcelorMittal forecasts a 1% drop in global demand.
Factors such as the COVID-19 epidemic, the European energy crisis, declining global demand and the war in Ukraine continued to weigh on steel prices in June. In the same month, market prices fell again by 7.87%. Hot rolled coil futures also hit a new low of just $976 per short ton. Slabs once again underperformed the index, while prices remained close to historical highs. It also passed a bipartisan infrastructure bill that buyers hope will provide significant support to steel prices.
In July, hot rolled coil prices reached a new low. Both HDG and CRC decreased steadily month over month. In July, global HRC prices fell to pre-war levels due to the Chinese lockdown and the prospect of a global recession. After reversing a five-month downward trend in early March, US steel prices suffered their biggest fall due to Russia’s invasion of Ukraine.
In August, the crude steel index fell again, this time by 8.73%. Despite geopolitical factors affecting steel production, steel plate prices have once again defied the odds and remained high. The gap between steel sheet prices and hot rolled coil prices reached a record high in August.
Steel prices fell again in September, with hot rolled coil officially falling below the $800 mark. The energy crisis has severely impacted the European steel industry, as reduced energy consumption leads to reduced production. Large factories in Austria, France and Spain are feeling the pain of the energy crisis: US rental prices are lower than European rental prices. All of these factors have a huge impact on futures and demand.
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On October 1, the price decline slowed down somewhat. However, the price still fell by 3.04%. Fortunately, the decline in prices for hot-rolled and cold-rolled coils has slowed significantly, and both have entered a sideways trend.
Meanwhile, production continues to slow. US Steel also suspended two furnaces as demand continued to be low. The company even discussed the possibility of permanently idling the Mon Valley blast furnace. Ultimately, the picture suggests that domestic demand will continue to decline.
Nucor also finally lowered its plate prices after repeated complaints about the huge price gap between plate and hot rolled coil prices.
In November, steel sheet prices stabilized again, but the overall steel index continued to fall, with a cumulative decline of 5.08%. Meanwhile, Nucor announced it would keep plate prices at $1,620 per short ton in December and would not cut prices further.
Finally, in December, the index began to move sideways. This is largely due to steel sellers raising prices to avoid reaching historic lows. The rise in costs comes as steelmakers warned that prices for hot-rolled coil, cold-rolled coil and hot-dip galvanized steel are approaching their respective break-even points. Given the downward trend, steel producers rightly fear that prices may soon reach the profitability threshold.
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Post time: Oct-31-2023