Global steel prices soar in September but for how long?

Steel prices increased worldwide in September, but buyers are questioning how long the uptrend will last. The rising cost of raw materials, reduced supply and an improvement in demand are the main drivers for the recent advances in global steel prices. Shortages are beginning to develop in many countries, for a wide range of products.

Mill output in the US and EU remains far below current capacity. However, many steelmakers are wary of ramping up their operations too quickly. They fear that demand will decline, as Covid-19 infection rates escalate during the winter months.

The previously buoyant Chinese market is beginning to cool. The increase in production rates is reportedly slowing. Nevertheless, a boost in demand is expected, following the upcoming National Day Holidays. The rising price movements recorded in China have paused but could continue their upward path in the coming months.

Recovering automotive sector

A recovery in the automotive sector is underpinning mill order books for the flat products sector in most countries around the world. Car sales have risen dramatically as people move away from public transport. Moreover, government incentive schemes are encouraging such consumer purchasing. Asian parts suppliers are benefitting from an improvement in export orders. This is helping to offset lacklustre domestic steel demand in many nations.

Healthy activity levels in the building and infrastructure sectors continue to boost sales of steel. However, market participants remain concerned about the lack of new projects. Price increases for long products are below those currently being realised in the flat product categories.

The current revival in the global steel market remains fragile. A resurgence in Covid-19 around the world could damage the economic recovery. Infection rates either remain persistently high or are rising in the US and many European nations. Numerous Asian countries are managing to keep new coronavirus cases under control. However, as many of these economies rely heavily on overseas sales, the ongoing pandemic in their traditional export markets is restricting their overall recovery.