Steel prices stay low, but for how long?

Steel prices continued their descent in July in different parts of the world.

Starting from Europe, due to the economic slowdown, the demand started to weaken as early as April/May. According to MEPS, 'steelworks failed to cut capacity in time to prevent a major deterioration in European steel prices' and 'current output still exceeds demand.'

But could the end of this declining path be near?
Some sources say steel prices are close to the bottom and expect a technical rebound in the coming weeks, after the summer at the latest.

Bloomberg spoke of a ‘growing sense of alarm’ at Chinese steel mills due to weak demand. Apparently, inside sales are somewhat stagnant despite the Chinese Government's efforts to stimulate domestic demand for steel.

Prices have been falling in recent months in India, too. In an effort to secure more steel availability on the national market, at the end of May, the Indian Government imposed an export tax of 15% on some steel products, which exacerbated the downward trend. Actually, there have been signs of improvement in demand in the last weeks, suggesting that the bottom has been hit. If not immediately, the demand is likely to further go up after the Monsoon season.

The situation is similar in the United States, with steel product prices at very low levels. Hot-rolled coils hit their lowest point since December 2020, according to SteelOrbis.

The steelmakers' investments toward greener steel production will likely put a damper on falling prices in the long term. In the short run, a full recovery, says MEPS, 'will only happen once buyers need to replenish stocks' - after the summer holidays.

Picture by WorldSteelAssociation

----

You could be interested in reading:
The steel planisphere: the major steel producing countries
Who rules the steel industry: the top 50 steel producers