Global steel prices forecast to remain elevated in 2022

21st December 2021

Steel market participants are becoming increasingly cautious in their purchasing requirements. The forward view on global prices is, gradually, turning more negative, particularly for coil products. The record high values reached in the summer of 2021 took many by surprise.

The peak of the price cycles occurred at differing points in each region. European transaction values reached their highest level in June of this year, while prices in North America peaked in September. Asian prices levelled off during the summer months.

The outlook for the start of 2022 is becoming clouded by yet another wave of Covid-19 sweeping across the globe. The ominous Omicron variant may slow the recovery in the steel market. Many buyers are concerned about a price collapse, in the coming months. Divergent trends, across the three regions researched, are envisaged in the short term.

European flat product prices are forecast to move upwards, in the early months of 2022. A resumption of purchasing is anticipated at this time. Mills are keen to recoup their rising outlay on electricity and gas.

North American transaction values are expected to continue to decline, in the coming months. Procurement activity is weakening, amid rising stock levels at distributors and service centres. Domestic steelmakers are likely to offer discounts to boost sales.

MEPS predicts that the Asian average flat products composite transaction value will decrease, in the immediate future. Covid outbreaks, across the region, are denting market activity and sentiment. A modest seasonal price revival is expected in the spring.

Reductions in steel selling values are predicted in the second half of 2022 across all regions researched. Diminishing growth in flat product consumption, due to the inflated cost of steel and other materials, is anticipated. Inflationary pressure is likely to dampen consumer spending. Moreover, the recovery in demand from the automotive sector is expected to be protracted.

MEPS does not envisage a price crash, despite the growing fear of this happening, from a number of buyers in the market. Global transaction values should decrease more slowly than they rose in the past year. The MEPS World flat products composite transaction value is forecast to average around US$1220 per tonne in 2022 – a rise of almost 60 percent above the 2010/2019 figure.

Prices are expected to find support above historical averages, due to increased mill input expenditure and moves to decarbonise the industry. The economic outlook for 2022 is also relatively strong. This is despite downside risks associated with new Covid variants and the expected tightening of monetary and fiscal policy in many countries.

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